A discussion of lease abstracting should start by first answering two important questions:
1) What is a lease abstract?
2) Why is lease abstracting important?
The answer to question #1 is this: a lease abstract is a short form outline containing the key terms and conditions of a specific lease agreement. Its purpose is to highlight the important points contained in the lease, thus eliminating the need to read the entire lease document word for word. Some people refer to the abstract as a “Cliffs Notes” version of the lease.
The answer to question #2 is that abstracts help find needles in haystacks. Most leases consist of a thick stack of pages, usually legal sized and characterized by extremely small print. Abstracts on the other hand are short and simple. Abstracts provide a road map to quickly navigate through the myriad provisions and conditions of a lease.
In its basic form, an abstract is a helpful tool to quickly isolate critical lease elements. For many, an abstract may be used as refresher or even a starting point to get a general sense of key facts. An abstract is not, however, a replacement for the lease document itself. Why? Factual references without legal context can be misinterpreted and unreliable. Most importantly, abstracts themselves are not binding legal contracts.
While lease abstracts can be helpful tools, they tend to have a common flaw; abstracts are “static.” That means most lease abstracts are created at a single point in time. The problem with this is that the underlying leases tend to change over time. Throughout the life of a lease, changes to the agreement will likely occur. Some changes may be insignificant, not requiring a formal amendment to the contract. Other changes however may necessitate a formal amendment to the lease. In either case, the original static abstract will be rendered out-of-date and unreliable. A new abstract will need to be prepared.
There is a solution to this flaw. That solution is to upload the abstracted information into a customizable database. More about that strategy will be covered in a later discussion focusing on automation of the lease administration process.