Brokers often need 4 to 8 hours to finish lease abstracting, which makes sense given that most leases include intricate legal jargon and complicated instances that need close attention to detail.
While ChatGPT could be helpful in this case, you might wish to take use of a more sophisticated and safe AI lease abstraction tool because of security issues and its incapacity to scan PDF documents and handwriting.
Since we are currently working on creating an AI tool for lease abstraction, we are delighted to walk you through the process and explain the limits of the available AI tools for lease abstraction as well as how to get around them.
- What is AI Lease Abstraction Process?
- What is a Lease Abstract?
- What Should a Good Commercial Lease Abstract Include?
- Stages of the Automated Lease Abstraction Process
- ChatGPT vs Custom AI Lease Abstraction Tools
- How to Build an AI Lease Abstraction Tool?
- There are already five lease abstraction tools available.
What is AI Lease Abstraction Process?
The process of using AI-powered lease abstraction tools to extract important data from a commercial lease agreement, such as parties’ duties, lease terms, and financial obligations, and summarize it into a clear text is known as AI lease abstraction.
According to CBRE, automated lease abstraction may really save brokers up to 25% of their time.
What is a Lease Abstract?
A lease abstract, also known as a “commercial lease abstract” in the real estate industry, is a succinct synopsis of a commercial lease agreement that includes important information presented in an organized format, including the terms of the lease, the parties’ duties, and the financial elements.
What Should a Good Commercial Lease Abstract Include?
The automated leasing abstraction’s output should be presented succinctly yet methodically, usually as a list with the most important information on it, like this:
- Tenant Information includes the tenant’s complete name, current address, financial records, past rent payments, and the results of any background checks that may have been performed;
- Second Party: The landlord or property owner is usually identified in this section as the second party to the commercial lease agreement. They should include a comprehensive description of their legal identity, contact information, and any other essential information pertaining to the lease;
- Base and Total Prices: the base rental amount plus any other expenses related to the property;
- Parties’ rights and obligations include the tenant’s right of first refusal, authorization for renovating the property, and the ability to terminate the lease. About the duties and rights of the landlord, which include collecting rent, maintaining and repairing the property, inspecting it, having the right to dismiss tenants, and extending leases;
- taxes: the terms of the lease abstract should indicate which taxes are the tenant’s and the landlord’s duty;
- reimbursements: any charges for common area maintenance (CAM) or other expenses that the renter must pay back to the landlord;
- Property Details: a description of the property that includes its location, zoning details, and physical characteristics;
- Title (Insurance): Information on the property’s title and if title insurance is offered should be included in the lease abstract. Learn more about the operation of title software.
- Security Deposit: the amount of the deposit, the circumstances behind its withholding, and the procedure for returning it to the renter;
- Important Dates: Usually, these are the dates of the beginning and end of the lease;
- Use Clauses: The commercial lease agreement’s list of permitted uses for the leased property, including the kinds of companies and activities that are permitted on the land, should be included in the lease abstract.
- Termination Clauses: information on notice durations, fines for terminating a lease, and any particular situations in which either party may end the agreement;
- Other Important Provisions: This section should include any other significant clauses unique to the lease, such as obligations for upkeep or insurance.
Stages of the Automated Lease Abstraction Process
Let’s now examine how these tools function after defining the concept of a lease abstract and what should be included in a good lease abstract. Workflows for AI lease abstraction tools obviously differ, but generally speaking, the abstraction procedure looks like this:
- On the leasing abstraction AI platform, users register, grant access, and upload the document from a local drive or cloud-based repository;
- The AI lease abstraction tool will use Optical Character Recognition (OCR) technology to convert the PDF document into machine-readable language once the lease has been submitted.
OCR is a technique that transforms various document types—such as PDFs, scanned paper documents, and digital camera images—into searchable, editable data that may be processed further by NLP technologies, which we’ll discuss later;
- Using tools like Azure Form Recognizer, OCR systems convert handwritten portions into text that can be read on a computer. However, before the system can go to the next level, users must manually check and amend the handwritten portions that have been identified for correctness;
- Texts longer than 8,000 words must be divided into semantic sections, or “chunks,” which will be analyzed independently of each other by GPT (as of GPT 3.5). Libraries like LangChain may be used to control these “splitters,” which already exist;
- Vector databases are used to store the pieces after that. In addition to ensuring effective data retrieval and preservation, a vector database offers rapid search capabilities that let you quickly peruse different contract portions. Using databases also removes the possibility that the outcomes of the lease abstraction process include erroneous or fraudulent data. Vector databases such as Pinecone and Zillis may be used for this purpose;
- In addition, users configure pre-programmed questions, which are then executed by the leasing abstraction system and ask it to summarize the text. Herein lies the potential benefit of NLP technology. Your lease summary AI tool can identify and extract items from the text, including tenant names, property characteristics, rental amounts, and important clauses, thanks to the NLP, or Natural Language Processing algorithm. Stated differently, it aids the tool in understanding the terminology used in legal papers. Currently, GPT-3.5 is the most widely used NLP model.
As an alternative, you may create a chatbot-like user interface (ChatGPT, for instance) that allows consumers to communicate with the AI lease abstraction tool instantly. If Azure Open AI technology is used at this point, it will ultimately turn the prompt into an embedded vector and do a similarity search to find the semantic portions using the relevant data. Moreover, the components are summarized;
- The last phase is a two-part validation procedure whereby the system uses a similarity algorithm to compare the commercial lease abstract’s contents with the original document. After that, it prompts users to manually review the lease abstract to make sure the reader would understand it.
Every time you make modifications to the final lease abstract, an AI model that is self-improving will remember your selections and adjust the subsequent summaries appropriately.
ChatGPT vs Custom AI Lease Abstraction Tools
Real estate brokers have found ChatGPT to be of great assistance, and if you are using it for document abstraction such as leases, then that is quite acceptable. You should be conscious of a few limitations, though:
- GPT 3.5 raises serious privacy issues since the model utilizes all of the data that is given into it for self-improvement. When entering addresses, phone numbers, and names, use caution.
- Images and PDF files cannot yet be scanned by ChatGPT. Although some early adopters have access to this capability currently, it is still in the future. Users have already reported errors they have encountered when viewing industry-specific information. While ChatGPT is a general-purpose language model, bespoke AI tools for lease abstracting scan documents in various forms. These tools are specifically designed with real estate terminology and document structures in mind. Therefore, the likelihood that ChatGPT may mispronounce legal jargon and provide erroneous findings is increased.
- Because ChatGPT wasn’t designed to handle massive, intricate real estate portfolios, it may not be as quick and effective at processing big data as lease abstraction AI solutions.
- While lease abstraction solutions are made to interact with property management systems, document management systems, CRM, and other systems, ChatGPT does not have this functionality.
- ChatGPT cannot be tailored to meet the particular requirements and different document formats of enterprises, in contrast to leasing abstraction AI solutions;
- When it comes to generative AI, ChatGPT got stuck in 2021. Additionally, as a model, it wasn’t created with legal and regulatory compliance in mind, so you can forget about utilizing ChatGPT for risk assessment or lease abstract review capabilities.
How to Build an AI Lease Abstraction Tool?
Locate a Certified Lease Abstract Development Partner
You need someone who has worked in the real estate industry for many years, if not decades. Someone who understands the ins and outs of real estate software development and can guarantee that your lease abstracting tool has the functionality you need, is in line with your business’s needs, provides users with the highest level of security, and simplifies the lease management process.
Why not concentrate on suppliers of generic software development? Our customers who have worked with generic software development businesses have told us that the onboarding and discovery phases might take an eternity, and if you are lucky enough to reach the development stage at all, there could be no post-development assistance.
With our more than two decades of experience, we have assisted businesses such as JLL, Colliers, and Hanna Commercial in automating their real estate processes via the use of proptech solutions. Additionally, we give specialized post-creation assistance to guarantee your program is long-term scalable and effective, in contrast to other generic software development companies.
Choose Functionality for Your AI Lease Abstraction Tool
Let’s begin with the essential features that any lease abstracting program has to have.
User registration and authentication: You need to make sure that team members can simply onboard and configure the right access levels, and that your software incorporates safe user authentication techniques like multi-factor authentication;
Data extraction capabilities are, quite clearly, the main purpose of your AI lease abstraction software; hence, OCR technology should be included within it to enable users to automatically extract important data from lease agreements;
would there be a separate library of pre-defined templates, or would the lease abstract templates be customizable? We suggest that you make sure customers may adjust the data fields they wish to extract if you’re developing a solution for businesses that deal with various kinds of documents on a regular basis. Additionally, keep in mind that the final leasing abstract has to be consistent, searchable, and simple to traverse.
For summary results, for instance, we have numerous customisable templates developed. A few alternatives are available for customers to choose from based on their preferences:
a condensed, one-paragraph synopsis of the article (usually limited to 1000 characters);
An overview in tabular form including Terms (e.g., “Base price,” “Commencement date,” etc.) and Values (e.g., “$350 000,” “14th day of November, 2024”);
a combined summary that provides a thorough overview of the document by presenting both text and a table;
In addition, customers may quickly and simply design a new template from scratch that perfectly suits their unique needs if they don’t like any of the aforementioned possibilities.
Version control and audit trails help users make sure they are dealing with the most current data by allowing them to maintain track of document versions and changes over time. The displays above demonstrate how we designed our application with an intuitive ChatGPT-like interface that makes it simple for users to switch between the document and summary parts;
- Role-based access control is a feature that the majority of automated leasing abstraction solutions provide for user access. For instance, you could want to designate reviewers/editors who have the authority to examine lease abstracts produced by the AI tool and make manual changes or corrections, or you might want to provide some individuals read-only access;
- Safe storage: as you may have previously realized, ChatGPT cannot allow users to save and quickly recover documents from the cloud; nevertheless, lease abstraction AI tools may facilitate this process;
- Integration Capabilities: You will value the integration of your AI lease with your software ecosystem if you are working in a team with a single pool of content or if you only require automatic summaries of papers that are already saved in your CRM / deal management system. Even if you do not now need this kind of connectivity, be careful to provide API capabilities in your bespoke leasing abstraction tool so that in the future it may be connected to other systems.
After developing the essential features for leasing automation, it’s crucial to decide which extra features will make your program stand out from the competition.
AI-powered automatic translation: businesses engaged in international real estate transactions may be searching for this feature to ensure that the leases they handle are appropriately translated and comprehensible in a variety of languages;
metrics and reporting: Some tools come with reporting options that provide users access to insights about data extraction, leasing patterns, and other pertinent metrics;
real-time user collaboration—allowing many team members to collaborate on projects using lease abstraction at once;
electronic signatures: without having to go to the agent’s office in person, users may sign papers electronically;
- Notifications and alerts: The program will notify the user if it finds any phrases, clauses, or wording that deviates from accepted legal terminology. Additionally, several automated lease abstraction systems have the ability to remind users of “sign” dates, therefore avoiding missed deadlines;
- Comparative analysis: users may choose a lease to compare against all other leases in the system as well as compare it to two particular leases of their choosing;
- Utilizing natural language processing technology, compliance analysis is a function that may guarantee smooth compliance monitoring by automatically searching lease papers for pertinent terms and legal requirements. Additionally, the clause will be quickly flagged by the algorithm if it violates any legal or industry norms.
You can completely assign the task of creating the tool to the proptech development team once you’ve located them, but if you’re still curious about the ins and outs of front-end and backend development, as well as how your AI lease abstraction tool will function from a system perspective, then continue reading.
Our Development Process for an AI Lease Abstraction Tool
We first used the Minimum Viable Product strategy in our leasing abstraction AI development process. This required us to develop a working prototype of our product that had just enough functionality to appease beta testers and collect important input for future iterations. It was essential that we listened to our customers since their feedback helped us customize the app to meet their specific requirements and preferences. If you want to collaborate with us to develop a proptech software, we will do just that for you as well.
Sign up, Verify, and Upload
Prior to downloading their document from local storage, customers must first register (we’ve made sure the procedure is easy, secure, and only needs basic user info). While our product and the majority of other lease abstraction solutions now in use encourage users to submit their papers in PDF format, your lease automation software may have other functionality that allows users to receive files in other formats, such as doc.
Users of our tool have the option to choose from pre-made templates or design their own (just so you know, some lease abstracting programs offer this and others don’t). Consider this: What if the lease has certain features that the majority of leases do not, but which have to be included in the summary? as well as handle or modify the prompt template.
Moreover, users implement the template after adding it to the system.
We nearly forgot to add that a slick appearance and usability go hand in hand with the software.
We took inspiration for our tool’s creation from ChatGPT’s user-friendly design. For our customers, we envisioned a fluid experience where they could navigate between their list of leases, the lease reference, and the Summary section with ease.
As you can see, our lease abstraction tool’s interface has a clean, well-organized layout: the list of documents is arranged in a distinct column on the left, the document summary is front and center, and the open original lease is easily accessible for consultation.
Using Vector Databases for Data Storage
The content and metadata of the commercial lease, which have not yet been divided into pieces, are uploaded by users in PDF format into two vector databases, Azure Blob Storage and Azure Cosmos DB, respectively. Databases play a crucial role in this situation since they not only let us store user content and information independently, but they also typically guarantee document accessibility and integrity by serving as dependable and secure storage options.
Optical Character Recognition (OCR) Systems for Text Recognition
After the user clicks the “Generate Summary” button, the system uses Azure Form Recognizer to convert the document into a machine-readable text by retrieving the content and metadata from the vector databases.
Splitting Text Using LangChain Library
The system then applies the prompt template, separates the text obtained from Azure Form Recognizer into pieces using the LangChain library, and inserts the chunks into an in-memory vector database using the Azure OpenAI tool.
ChatGPT Technology Processes Text Chunks
Yes, we have informed you that ChatGPT is an important integration to take into account when developing a lease abstraction AI tool, but we have also informed you that utilizing ChatGPT as a stand-alone lease abstraction tool is inefficient. Let’s investigate the reason.
Following the user’s click of the “Generate summary” button, each chunk is handled independently and in order. After searching the In-Memory database for each template, the system transfers the text and the prompt to ChatGPT 3.5 (this is the current version, but once the new versionis started, we may also plug in the latter provided the LangChain library can handle it. This reduces the amount of text that needs to be analyzed.
After ChatGPT responds to the prompt questions, the system combines the prompt responses into a single structured response; the user may choose the format of this response, which essentially is the leasing summary. Therefore, in order to serve this goal, our application offers users a variety of format choices, including a table-style summary, a one-paragraph summary, and a mix of the two.
The finest aspect? We have made sure that, with a little assistance from comparison analysis, our consumers may create an ideal leasing abstract. By giving the system what they believe to be the “perfect” lease abstract, users may ask the system to assess the lease abstract by contrasting it with the example.
Ultimately, the program will grade the abstract and provide feedback that includes any discrepancies or missing information.
Giving the User back the Abstract and displaying it
Following the text chunk processing, our program returns and shows the lease abstract to the user after storing it in the database.
The integrity of user data is our top priority as developers. Users may only get their summary after manually validating and accepting the handwritten blocks that have been identified.
Obtaining the Synopsis
Though we can assist you in developing an AI lease abstraction tool that enables your customers to convert their commercial lease abstract into other forms, such as Excel spreadsheets, our users can currently only receive their lease abstracts in PDF format.
Assurance of Quality and Implementation
After your lease abstraction tool has been developed, our experts will carefully review every feature to ensure that it can reliably extract and arrange lease data in practical situations.
Additionally, we’ll install your leasing abstraction program on a server or other business equipment.
We are dedicated to ensuring your pleasure even after deployment. We’ll provide committed support services to quickly handle any questions or issues that may come up while using the product. Throughout the onboarding process, our team will support your employees and make sure they learn everything they need to know to easily use the lease abstraction software.
There are already five lease abstraction tools available.
One of the top lease abstraction companies, Docsumo, provides an all-in-one software with pre-trained APIs and a clever OCR technology that enables extraction from different document formats, layouts, and tables. The technology pulls data from complicated leases with a 99%+ accuracy rate, removing human mistakes and facilitating quick decision-making for property managers, brokers, and legal companies.
It enables custom ML model training, verifies real-time data, connects with other systems, and automatically classifies data.
Our conclusion: After looking over the evaluations, we discovered that 96% of Docsumo customers are satisfied with the program. According to their claims, businesses can handle up to 2000 leases every month in formats including Excel, PDFs, and pictures using Docsumo, which is simple to use.
Additionally, Docsumo is an AI-powered lease accounting software that enables customers to determine which property will provide the most money over the long run by calculating costs and cash flows.
LeaseLens, another firm on our list, is able to reduce the time it takes to abstract a lease from hours to minutes by precisely and swiftly extracting the necessary lease data. It allows you to personalize abstractions to your tastes with over 200 industry standard features, such as important dates and renewal choices.
While reading abstracts on the site is free, exporting to Excel or Word templates costs a minimum of $25. Additionally, your data is safe since privacy is our first concern and leases are erased after abstraction.
Our conclusion: Since LeaseLens is a startup and just recently published their solution, compared to other AI lease abstraction firms on the list, we haven’t discovered enough evaluations of LeaseLens online. Try LeaseLens without a doubt if your company’s operations don’t often need lease abstracting, you need something straightforward, and you don’t want to install any special software.
Files in any format, including outdated scans, may be handled by this flexible lease abstraction program. Kira is proficient in several languages and jurisdictions, and she can easily transition between Latin-script languages like German, French, and Spanish. To ensure smooth data synchronization, users may export metadata to Word, Excel, or other systems with ease.
Robust search capabilities in Kira facilitate efficient review organization by enabling customized searches for provisions and custom tags. Bulk redlining against a form makes comparisons easier for users, and the unique “heat map” function allows for quick examination.
Our conclusion: Kira’s capacity to stay updated on policy and regulatory changes is highly praised by users, since it is crucial for maintaining legal compliance. Concerning the disadvantages, a few customers complain that Kira recognizes handwritten portions poorly and is rather pricey in comparison to other automated lease abstraction services. Notwithstanding the criticisms, we believe Kira is a great option for large, international real estate companies in urgent need of AI lease abstraction solutions that can be customized for a variety of formats and languages.
Imprima offers automated lease abstraction as a component of the whole lease management process by using artificial intelligence and machine learning. 35 pre-filled fields are included in the tool, including “lease space,” “signing date,” and “price.” Users are able to find, modify, and add values by looking at the values they have picked from this list, which are shown next to the open document.
With Excel export options, Imprima allows document filtering based on parameters like price and expiration date. During lease evaluations, it may also provide aesthetically pleasing client reports and paraphrase provisions.
Our conclusion: Imprima is the best option if your business regularly handles many kinds of leases, such as software licenses, commercial leasing agreements, and mortgage contracts. Concerning the disadvantages, a few users argue that Imprima’s design is not user-friendly. Thus, Imprima is intended for consumers who are tech-savvy. If you’re using leasing abstraction for the first time, you should absolutely use a different program.
The lease abstraction process is accelerated by 85% using Summize. Through Microsoft Teams and Slack, users may interact with chatbots via its “Legal Frontdoor,” which allows them to easily generate leases from pre-approved templates. Users may send inquiries to the legal staff directly if they need legal guidance. Task creation, abstracting commercial leases, and sharing made simple are all made possible with Summize.
In order to accommodate attorneys’ preferred work environment, the program performs accurate risk assessments and identifies opportunities for development. All of this is presented in a familiar “Microsoft Office” format.
In summary, Summize is a program that is very easy to use, especially for non-technical people. Therefore, use Summize if this is your first time utilizing an AI leasing abstraction tool, particularly if your business already uses Microsoft Teams, Slack, Microsoft Office, or Salesforce, since Summize interacts seamlessly with these platforms.
the guide to building an AI lease abstraction tool in 2024 provides valuable insights into developing an innovative solution for streamlining lease data extraction. By incorporating key steps and technologies, businesses can enhance efficiency and make significant strides in the real estate industry.
Moreover, if you are looking for a Real estate development company that can help you create a future proof solution then you should check out Appic Softwares. We have an experienced team of Proptech developers that have created several real estate solutions like RoccaBox.
So, what are you waiting for?