Monday, January 23, 2012

Lease Abstraction Helps Avoid Landlord-Tenant Dispute



There are several instances when this tension between the landlord and tenant arises due to erroneous or not well drafted lease documents. Commonly, the tenants express shock or discomfort over the amount of rent and rent escalations that they are supposed to pay to the landlord. The landlord on the flip side is taken aback by tenant’s discomfort regarding these charges. From a landlord’s perspective he/she is doing nothing except demanding charge against the leased out real estate.

Oftentimes, oral negotiations are not clearly expressed and documented in the final lease document, making it completely unworkable for either or both the parties. Consequently, there are clauses inviting conflicting interpretations by both landlords and tenants. In order to avoid these disputes, it is absolutely worth reviewing all the key lease abstracts.

The key information outlined in a lease document indicates all sorts of rights and obligations levied upon and agreed by both the parties. Lease amount, possession details, renewal rights, escalation clauses, right to reduce rent if certain conditions are met, rights to lease termination, pricing of after-hours electric, parking rights & pricing etc. are some of the common lease terms / abstracts, vital for hassle-free association between both the parties.

Furthermore, these lease abstracts are specifically useful in analyzing property value before making purchase and are commonly used by finance companies to evaluate the value thence income produced by the property before making an offer of funding. Responsive lenders / owners of real estate property not only recognize and understand the value of these documents but also prepare them in advance for painless due diligence, property value estimation or management of any sort of dispute that may arrive.

Lease abstraction is furthermore extremely vital for due diligence for a multi-tenant commercial property. Since lease terms vary drastically in case of multi-tenant commercial leases, it impacts both the quantity and quality of rental income. This is why we recommend that each lease document is abstracted carefully to highlight key lease elements / clauses as these modifications substantially impact cash flow and the value of the property.

Lease abstraction is a tedious and time consuming process, since each lease is often 30 to 100 page document with several key fields/information hidden between complicated points & paragraphs. We also carry out rental calculations and Operating Expenses Share. With our extensive experience in litigation consulting and process outsourcing services, we have been providing clients with abstraction services for Real Estate Leases, Insurance Agreements, Procurement Agreements, License Agreements, Purchase & Sale Agreements, Consultancy Agreements, Judgment Abstracts, Case Law Abstracts, Class Action Summaries, Statement of Witnesses etc. In comprehensive litigation consulting and process outsourcing services, we have been helping legal community and international corporations concentrate on strategic legal challenges and streamline their operations.
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