Lease Abstraction: The Complicated Made Simple Image

Lease Abstraction: The Complicated Made Simple

August 22, 2023

Lease Capitalization / Accounting

Lease abstraction in and of itself is all about one thing: simplicity. A commercial lease is filled with complicated legal language with major financial implications on the line. Sometimes the language can seem conflicting, other times it can be so densely worded with legal phrases that it can be nearly impossible for anyone other than an attorney to understand.

When the stakes are as high as they are in commercial real estate, you need a partner to help you navigate the waters. With the help of expert lease abstraction services, not only can you avoid costly mistakes, but you will also be properly positioned to take advantage of any opportunities that may come your way. Let’s take a look at how lease abstraction can streamline the management of your real estate portfolio and the ways you leverage it.

Start Simple

When you first receive the lease for your prospective property, it can feel like you have just been handed a puzzle. You want to be sure that you fully understand each aspect of the lease so that you don’t find yourself non-compliant with important clauses. You also want to make sure that there isn’t potentially predatory language that could leave you at a disadvantage. Before you even begin to read — let alone consider signing anything — find a lease abstraction service you trust. An experienced lease abstraction team will be able to simplify the language so that you have an accurate understanding of the important clauses within the lease.

Opportunity Cost

We often discuss opportunity cost and how it informs our decision making. When building your portfolio, you want to be confident that the course of action you have chosen will have the greatest overall positive impact long-term. With that in mind, consider this scenario: you read through and sign a lease agreement without any consultation. Six months later, you find that you are non-compliant. You weren’t aware of the specific clause when you signed and now your lease is in jeopardy.

In this scenario, the opportunity cost of not contracting a lease abstraction service could be the loss of capital that has been put into renting and outfitting the space to fit your needs just to have the lease nullified. With little legwork on your part, you would have been able to avoid the situation altogether by either ensuring that you were compliant or deciding the clause was untenable and moving on from the property.

Penny Saved, Penny Earned

Luckily, there is more to lease abstraction than risk avoidance. There can be some real long-term savings to be had by working with a lease abstraction service. By carefully considering each clause, any contradictory language can be highlighted and reconciled. Not only will this simplify your lease, but it can make it easier to comply with as well.

Another possible outcome is that your lease abstract reveals some opportunities that you can leverage, making your portfolio more robust in the meantime.

Lease Abstraction Services for You

Scribcor is the leading lease abstraction service. We have decades of experience in the lease administration and abstraction sectors, helping our clients manage their real estate portfolios in a way that optimizes their leases to be as healthy as possible.

If you are looking to simplify your due diligence, reach out today!

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We’re always happy to talk lease management. If you’d like more information about our services, or have a question, or just need some helpful advice on how to get started, just send us a note and we’ll get right back to you. There’s never any pressure or obligation and your contact information is kept confidential.

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