Understanding The Lease Abstraction Process

Lease abstraction process refers to the way
in which the important or crucial points covered in a real estate lease agreement
are summarized. A lease abstract summarizes the key aspects of a lease
agreement from a legal, business, and financial point of view. A reader can
understand the salient features of a lease agreement by simply reading the
lease abstract, which can save a lot of time and effort.
Understanding
a Lease Abstract
Making proper lease abstracts is the
quickest way to keep track of all lease agreements that have been entered into
by a company or an individual. Several companies enter into numerous lease agreements
with different parties. A lease abstract can be made for a single property or a
whole portfolio of properties.
If several properties are involved, then it
becomes more crucial for companies to undertake a lease abstraction process. A
lease abstract allows you to keep track of all the crucial information that
forms part of a lease agreement. It summarizes information such as the
commencement date and expiration of a lease, the obligations of the tenant and
the landlord, the terms of payment, as well as logistical details.
The lease abstract mentions the clause in
which this information has been set out in the lease agreement so that a person
reading the lease abstract can easily find the relevant clause in a lease
agreement for more detailed understanding.
Why is
Making a Lease Abstract Essential?
A lease agreement can be a complex document
and can be almost a hundred pages long. Most of the information contained in a
lease agreement is routine information and standard clauses. However, a lease
agreement also contains some crucial information that all parties to the lease
agreement must be aware of.
Having a lease abstract made is an easy way
for a party to a lease agreement to keep themselves aware of the important
aspects of the lease agreement. Instead of having to go through hundreds of
pages of complex legal language, the party can simply read half a page of the
legal abstract to keep themselves abreast with the necessary information.
Undergoing a lease abstraction process becomes more crucial if there are more
than one lease agreements involved. If it is difficult to read and understand
one lease agreement, doing so for a hundred lease agreements is even more
difficult.
What is the
Essential Information That Needs to be Present in a Lease Abstract?
A lease abstract should provide all the
information that a lessee or a landlord needs to know about a lease agreement.
From the outset, a well-drafted lease abstract should define the key terms
contained in the lease agreement that need to be known before the parties sign
the agreement.
The lease abstract will contain information
such as the commencement and expiration of the lease, the duties and
obligations of both parties, the terms of payment, when can rent be increased,
whether the lease can be renewed, who is responsible for the maintenance of the
property, and who needs to undertake the cost of improvements to the property.
The lease abstract will provide an outline
of the lease agreement so that the reader can understand and act on the
information. The primary purpose of a lease abstract is to save time, effort,
and money.
How is a
Lease Abstract Made?
For a lease abstract to be effective, the
crucial and important clauses contained in a lease agreement need to be
identified and summarized in the lease abstract. A well-drafted lease abstract
will cater to the needs of the parties of a lease agreement and provide the
information that they require. Unlike a lease agreement which is meant to be
interpreted in a court of law, a lease abstract is meant to be read and
understood by the parties to the lease agreement.
Conclusion
If a party to a lease agreement is unsure
about the lease abstraction process, they can outsource their lease abstraction
needs to a professional in the field. OHIs team of Lease Abstractors are
skilled in the job of handling legal abstraction processes and can do the job
in a timely, efficient and effective manner. Outsourcing your lease abstraction
requirements may save a lot of time and money.
About
OHI is
a thirteen-year-old real estate services company working with 50+ commercial
and residential real estate developers, funds and property management companies
across USA. Our deep expertise in real estate accounting, financial analysis,
lease administration and asset management has helped clients cut associated
costs by 40-50%. We currently provide these services to a portfolio of 75000
units across clients.
We invite you to experience leasing and
accounting outsourcing through us.
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