writing a commercial lease abstract

The Ultimate Guide to Commercial Lease Abstracts

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    Commercial real estate agreements are often hundreds of pages long, which is why having a commercial lease abstract at your disposal is a good idea. These documents present critical information in a consumable form, eliminating much of the confusion from commercial real estate (CRE) contracts.

    Every lease abstract should present essential data from the real estate agreement to ensure it provides its intended benefits. This guide will look at what information this summary document should include to keep parties informed throughout a commercial lease agreement.

    What Is a Commercial Lease Abstract?

    A commercial lease abstract is a document that boils down a real estate agreement, which could be over 100 pages long, into a brief, easy-to-read summary. This document ignores non-essential data to focus on key points and eliminate legalese.

    The result is a summary that presents essential pieces of information in short form, illuminating the agreement’s details without requiring hours of reading. A commercial lease abstract is an essential piece of knowledge for landlords and tenants alike in the CRE world.

    Why a Commercial Lease Abstract Is Essential

    A commercial lease abstract is a vital document because it eliminates the need to read pages of dry legalese on a real estate agreement’s inner workings. It allows for a quick and easy understanding of the most critical points. This summary also:

    • Mitigates risk 

    Compliance is essential when signing a commercial real estate lease, and all organizations involved must understand their rights and responsibilities. Failure to do so could result in lawsuits that cost money or even property. An abstract ensures that owners and tenants have the most important information available so they don’t make costly mistakes.

    • Saves money  

    Time is money, and the more time investors or business owners must spend concentrating on their lease agreements, the less time they have to focus on other tasks. Additionally, missing dates could result in late fees on rent, taxes, maintenance costs, and interest. Having these details available in a straightforward document makes it less likely that either party will miss important dates and experience penalties.

    • Leverages data 

    Investors with stakes in multiple commercial real estate buildings can combine these abstracts with technology to analyze their portfolio performance.

    leveraging data in a commercial lease abstract

    Once the information is analyzed, investors can use it to make strategic decisions on further acquisitions and diversification.

    • Creates value 

    A commercial real estate abstract creates value by clearly showing any shortcomings in rent provisions. A look at the commercial lease summary could point to issues that are hindering profitability if a particular property isn’t making money. Tenants can also use this data when negotiating future agreements or renegotiating a lease by pointing to rental provisions that eat into their profits.

    These abstracts are beneficial for both sides of a commercial lease agreement because they help keep the deal on track and provide the data they can use to inform future decisions. The key is ensuring that the summary includes the necessary information.

    7 Must-Haves for Every Commercial Lease Abstract

    Every commercial lease abstract will differ because it’s dependent on the actual contract’s provisions. There are, however, some key pieces of information that every summary should provide.

    1. Basic Information

    It might sound obvious, but every commercial lease abstract should include basic information like the landlord and tenants’ names, the address of the leased space, a description of the building, and the dates for which the lease is active. Putting this data at the top of the summary makes the correct document easy to locate when needed.

    2. Rent Provisions

    The document should go over rent provisions, such as the base amount, planned future rent escalations or deductions, and security deposit information. Information on maintenance charges, taxes, improvement fees, and other mandatory financial elements should also show up in the commercial lease abstract. That way, this data is simple to find if there’s a disagreement.

    3. Other Money-Making Opportunities

    Besides rental fees, some landlords might want to charge for parking, signage, after-hours use, and HVAC, or they might include receiving a certain percentage of retail sales.

    money making opportunities involved with a commercial lease abstract

    Since money could be changing hands through these provisions, they should be easily accessible through the abstract.

    4. Renewal Options

    What are the property’s renewal options? When the lease ends, the tenant and landlord should know whether there’s a provision to extend the lease, how to exercise this option, and what it means for the existing contract. Having all renewal information in the summary can make the next steps far easier to navigate.

    5. Exclusive Use Clauses 

    An exclusive use clause could prohibit the landlord from renting space to a similar business in the same building. If an exclusive use clause is present, it should be included in the commercial lease abstract to potentially avoid future lawsuits if the property owner doesn’t follow it.

    6. Termination Information

    What happens when the commercial lease comes to an end? Information on termination clauses, including hidden ones, should appear on the abstract to help avoid confusion. The more information each party has on how the end of the agreement works, the easier the process becomes.

    7. Right of First Refusal

    Both parties should be aware of the existence of a right of first refusal provision. The landlord needs to pass this information on to interested buyers, while tenants need to know if they can stay when the property sells.

    Including this data on every commercial lease abstract ensures that the reader is informed on the agreement’s most pertinent inclusions and can make decisions based on this information.

    Commercial Lease Abstracts in Washington DC

    It goes without saying that, while a commercial lease abstract is a straightforward document, it draws its details from a complex contract full of legal jargon and complicated equations. Therefore, acquiring a summary is a good option for tenants and landlords alike.

    Writing a commercial lease abstract yourself is incredibly challenging, but, fortunately, the professionals at The Genau Group can assist. Our team of lease audit experts will provide you with an abstract, ensuring that tenants know what’s in their contracts and what changes annually. Contact us with any questions you have about commercial lease abstracts.