Lease abstraction is a substantial document review technology made for the real estate world. Lease Abstraction is built on technologies such as natural language processing (NLP), optical character recognition (OCR), and machine learning (ML), to automate the capture and extraction of relevant data elements.
The lease abstraction software has been trained to recognize key obligations and clauses specifically from real estate agreements: lease, sale, tenancy agreements, and so on.
The lease abstraction software automatically extracts specified key provisions and distills them into the final product, the lease abstract: an easily navigable document – usually in Excel or Word format, which includes the most relevant legal and financial information included in the agreement. The lease abstract also includes a breakdown of the parties’ obligations and references to the original agreement.
Why Lease Abstraction is Important
A lease abstract makes it easy to review and understand the main points of a contract, at a glance, without the need to read long, tedious agreements and it also reduces the time and costs involved with contract review. Automated lease abstraction is useful for at least 3 reasons:
Volume: Extracting clauses and obligations from an agreement that can be hundreds of pages long is a tedious, complex task. Landlords, banks, property managers or other companies may find themselves managing a large portfolio of lease agreements and needing to process an incredible amount of data, both in physical and digital formats.
Diversity: Agreements vary in terms of clauses, content, obligations, and terms used. The wording used for the same concept can be different across jurisdictions or even firms. Regulatory requirements can also substantially vary across different jurisdictions and be incorporated into the agreements. Contracts can be drafted in different languages. Last but not least, they can be stored in different formats: word documents, pdfs, images or paper.
Accuracy: When contract review and data extraction are performed manually, the risk for mistakes is higher. If the operation has to be performed under a time constraint, the risk for mistake becomes even higher.
The Technology Behind Lease Abstraction
Lease Abstraction is based on advanced Artificial Intelligence algorithms – which involves a training phase of the algorithm and an evaluation phase.
Document scanning The tool scans the agreements – converting Word or pdf documents into machine readable HTML. if the software is powered with OCR technology, it’s also possible to process scanned paper documents and image files.
Training phase The lease abstraction software needs to be trained to understand and review sets of agreements. Training involves using NLP techniques to annotate a set of documents. The accuracy of the system is clearly proportional to the amount of time invested in training, and to the volume and variety of datasets supplied. This is because the more varied a data set is, the more likely the technology will be able to capture grammatically similar sentences, synonyms, and so on.
Self-learning phase This is a subset of the training phase: if the technology relies on machine- learning algorithms, it will be able to effectively detect newer language variations and identify new lease nomenclature, basically “auto-training” itself.
Evaluation The training phase is followed by a verification phase, where the extracted datasets are evaluated by humans and corrected if necessary.
Execution Once the training and evaluation phases are completed, the lease abstraction software is ready to work and identify a number of selected clauses in the agreements it reviews. The provisions and the obligations are then extracted and exported into the lease abstract, that can consist of an Excel or Word document.
Integration The most advanced lease abstraction tools also offer the capability to integrate with any existing workflow, DMS or ERP. The extracted data can automatically flow into the lease management system, making it easy to review through an API.
Cognitiv+ lease abstraction solution is a machine learning technology that has been trained to identify the most common and sensitive provisions and obligations in lease agreements, guaranteeing accuracy, facilitating interpretation of contract clauses, and mitigating financial and legal risks. The OCR technology allows for upload of documents in many formats (image scans, in addition to pdfs and Word docs), while the neural translation module allows for easy translation of +50 languages into English.