When it comes to leasing software, most of the emphasis is on handling and manipulating large amounts of specific lease data.
But one of the most important pieces of information your leasing software has to handle and present is simple—the lease abstract. It may seem like an afterthought, but there are many ways you can use it to enhance your lease portfolio.
So let’s review. To start, we’ll cover what’s included, and we’ll also tell you why it’s there and why it’s important. When we’re done you’ll come away with a full understanding of how lease abstracts work, and how they can serve you as you manage your leasing portfolio.
The Lease Abstract Basics
On the surface, the definition of a lease abstract is simple. Think about the written and legal meaning of that second word, and it will tell you all you need to know, definition-wise. Or maybe not. In fact, the leasing abstract contains the most important legal and business details of a lease, so it’s actually not as simple as it seems. In addition, it helps direct users when it comes to accessing the specific provisions of a lease, and this can provide both information and possible ways to use them effectively. The fact that your lease abstract isn’t typically written in legalese is one of its biggest strengths. That makes it easy to review and update, especially with the right software. If it’s not, you likely have a big problem. Having a lease abstract that isn’t current and accurate can turn your entire lease portfolio upside down in the worst possible ways, which can cost you money and also lead to bad business decisions.
The Info that Should Be in a Lease Abstract
With all of that in mind, let’s nail down exactly what needs to be in your lease abstract. Most of it is fairly basic, and a good leasing software package will help you add to the abstract in ways that can make it even more useful.
If you’re using your lease abstract it for management, underwriting, a merger, or an acquisition, it will have lots of important details on top of the basics.
To see how all this works, let’s take the real-life example of a real estate lease. It will contain the names of the landlord and the tenant and the terms and expiration dates of the lease, along with the renewal options and information about whether those were previously exercised by a tenant.
Ideally, it will also include information about the space being rented. Typically this will be expressed as a combination of the address and square footage of the space, but obviously the lease abstract for a commercial lease will be far more thorough and detailed.
Many of the basic financial numbers will be in the abstract, too. Think base rent, planned escalations, taxes, and sublet options for starters, along with a listing of additional sources of revenue connected to the lease (e.g., parking spaces, part time commercial usage, etc.)
Those numbers should be concise, cogent, and easy to understand, and a good lease software package will allow you to make sure that’s the case.
Finally, some of the legal rights pertaining to the will also be covered in the abstract, although not down to the last letter, obviously.
For example the abstract might show information about the right of first refusal if the owner sells the property, or whether the tenant has the right to lease another space in the property being rented under different circumstances.
Commercial Retail Leases
The lease abstracts for commercial leases are obviously different, especially when the space is used for retail purposes.
If this is the case, the geographical uses of the lease may be spelled out when it comes to the arrangement of different store spaces.
The abstract may also contain things like competition clauses, restrictions on neighboring retail spaces, exclusivity agreements, and so on.
Finally, you may also see lease elements like the required hours on the abstract, together with gross sales and the percentage of revenue the landlord may be allowed to receive as part of the rent.
There may also be co-tenancy clauses that give tenants the ability to reduce the rent if key tenants or a specified number of tenants vacate the retail property.
Equipment Lease Abstracts
The abstracts for leased equipment are just as important, and perhaps even more critical for certain types of businesses. Typically, they’re among the most poorly managed assets in a company’s financial portfolio, despite their size and value.
As a result, many CFOs have no idea how much equipment they actually own versus how much they lease, where that equipment is located, and what the start and end dates are for all of their equipment leases.
A good lease abstract can straighten out that kind of situation quickly, and indeed, it’s often the first step in cleaning up that kind of equipment-related mess. pertaining to equipment can often be the first step in cleaning up that kind of mess.
Using today’s leasing software, CFOs and managers can set up a simple lease abstract template that allows them to fill in the blanks for the equipment they have.
They can follow most of the same informational guidelines they use for real estate when it comes to covering the basics. In addition, a versatile account leasing package will allow them to customize the abstract and use it to subdivide the different equipment types into more manageable categories.
There are more benefits as well. Once that information has been set up, entered and organized, the least abstract data for both equipment and real estate can be shared across multiple departments.
That data sharing nearly always results in better, more informed business decisions, so it’s easy to see how that simple lease abstract can be a vital tool in how you manage your lease portfolio and your business as a whole.
How to Get Your Lease Abstract Right
There are plenty of leasing software companies that will tell you that their packages will help optimize their lease abstracts, but the simple fact is that we’re the best at it.
We’re an industry leader, and we’ve been designing this kind of software for years, so we’ve seen every kind of lease abstract situation you can think of. Want proof? You can chat with us live on our website.
You’ll also find lease abstract information on our website, and we’ll be happy to answer any questions about your situation and how you can get the most information from your lease abstract.
Want To Learn More?
If you're looking for the best equipment lease software on the market, look no further than iLeasePro. It has everything you need to streamline your equipment leasing operations. Try it today and see for yourself how easy it is to use! View our pricing and Schedule A Demo Now to learn more and see how iLeasePro can work for you.
Let iLeasePro Simplify Your Lease AccountingSchedule a Demo
Related: Free Trial, Express Subscription, ASC 842 Financial Reporting, ASC 842 Balance Sheet Reporting, ASC 842 Income Statement Reporting, ASC 842 Cash Flow Reporting, ASC 842 Statement of Shareholder Equity, ASC 842 Disclosure Notes, ASC 842 Management Discussion, ASC 842 Comprehensive Income, ASC 842 Glossary of Terms, ASC 842 Journal Entries, ASC 842 Software, When Is the ASC 842 Compliance Date, FASB Lease Accounting Software, Understanding the New FASB ASC 842 Lease Accounting Standard, How Does a Lease Balance Sheet Change After the New Standard?, Tracking Lease Details After ASC 842, Deferred Rent Explained Under the ASC 842, Guide to Lease Classification, Overview of Relevant Borrowing Rate, ASC 842 Footnote Disclosure, Lease Accounting, What Does Lease Accounting Software Do?, Key Features of A Lease Accounting Software, How to Never Miss Important Lease Dates, Scaling Your Lease Accounting Software to Your Business Needs, How to Select the Right Lease Solution, How to Set Up Lease Accounting Software, What is the Best Lease Accounting Software?, Overview of the Types of Leases, Equipment Lease Software, How the Right Lease Management Software Makes Equipment Leases Easier, Lease Tracking Software, How The Right Software Can Help You Manage Lease Data, Five Benefits of a SaaS Lease Management Solution, A Centralized Lease Portfolio Making Asset Management Easier, Lease Analysis 101, Lease Analysis: The Financial Metrics, Lease Abstraction, The Importance of Lease Abstraction for Lessees, What Software Do I Need for Lease Abstracting?, Navigating The ASC 842 Accounting Audit, Ultimate Lease Accounting Audit Checklist, Essential Guide To Engaging Auditors, Leveraging AI for Enhanced Year-End Audits