Why All Lease Abstracts are Wrong!

If you think about it, every abstract is, by its very nature, wrong.  It is an inherently incomplete picture of the rights and obligations of the underlying documents.  As any attorney will tell you, documents speak for themselves.  The minute you change, summarize, abridge, characterize or otherwise alter the words, you change the meaning.  That’s why most attorneys struggle with abstracting leases; they are consciously removing the details that they know were put in there to provide clarity and avoid ambiguity.

So the real question is:  what purpose is served by lease abstracts?  In most cases, it is (1) to provide a light summary of clause that serve as a guideposts to the actual language and (2) to provide metrics across a portfolio.  To achieve the first goal, it is critical that each summary is brief and captures the essence of the clause.  This requires a careful reading of the lease by intelligent, experienced abstractors.  But even with the best summary, no real estate professional worth his or her salt would make a decision based on an abstract; they would read the actual clause.  That’s why the summary must indicate exactly where the clause can be found in the document.  In fact, the easier it is to get to the actual language, the less the need to summarize what it says. 

Locating the clause in the actual document can be further facilitated by creating a clause index in the electronic version of the document (such as by using the Bookmarks feature in Adobe Acrobat).  In better lease management software systems (such as Visual Lease) the system will automatically take you from the abstracted clause to the clause in the actual document. 

For purposes of developing metrics, you need to balance the quantity and quality of the information.  You need to set up the right number of clauses to provide meaningful analyses and reports.  In many cases, this is very simple information (e.g., Exterior Maintenance is either “Landlord’s Responsibility” or “Tenant’s Responsibility”).  In other cases, you might need to get more specific (e.g., separating Insurance into Casualty Limits, Casualty Deductible, Liability Limits, Liability Deductible, Right to Self-Insure, Certificate Requirements, etc.).  It all depends on what is important to you and how you intend to use the information.

In the end, the key to good abstracting is spending the time to figure out what you and your company need to manage your business, and developing a model that provides the foundation and all of the elements to achieve that goal.