Real Estate Lease Contract
Real Estate Lease Contract Management
Luther Systems has developed a Real Estate Lease Contract Management System using its proprietary LEIA (“Luther Enterprise Infrastructure Architecture”) platform. The Real Estate Lease Contract Management is based on a Smart Contract that enables a seamless, reliable, automated execution of the end-to-end rent review process. Ultimately the goal was to streamline and automate the majority of real estate operations, which results in a lower cost base and higher value for the clients, leveraging technology, specifically Smart Contracts.
Property rent reviews are a ubiquitous part of real estate portfolio operations. Specifically, indexed space rent review processes involve an almost standard set of operational steps, and yet they remain largely manual to this day. Large lease contracts tend to need to be periodically updated according to Rent Review schedules as set out in the initial contract terms. On these Rent Review Dates, the rent due is re-calculated based on certain macro-economic indexes (eg. RPI/CPI), and the contract between the Tenant and the Landlord is updated. The client’s current rent review process is fragmented. Each lease contract has its own individual Rent Review Dates (RRDs), indices, individual tenants, and landlords that need to be informed of the changes during the process.
Currently, on the RRDs, the new indexations are manually updated using a variety of data sources, manually re-checked by the client, and new contracts manually re-generated in order for the Tenant and Landlord to finalise. These manual checks and disjointed systems result not only in errors, but also extended time periods over which these changes are made, and the reduced ability to efficiently scale this product offering to more customers. Duplicative processes increase the costs to perform this Rent Review function.
Luther Product: How it works
Luther Systems has developed the Real Estate Lease Contract Management System using blockchain technology, and in particular Smart Contracts, to address this need. The product stores a lease contract on the blockchain, automatically generates the new indexation required on the Rent Review Date, drafts the Rent-Review memo distributing it to the Tenant and Landlord, and after signing stores this updated contract on the blockchain. Manual intervention is only needed for the signing of the new documentation and to resolve any disagreement between the Tenant and Landlord on the new terms. The product provides integration into the client’s existing IT infrastructure, as well as a roadmap for expansion to include numerous contracts, tenants and landlord types.
This Case Study focuses on the application of LEIA technology used for Real Estate Lease Contract Management for the client. However, it is important to note that this system can be readily replicated and scaled to use across all forms of Rent Review Management, as well as expanded to other processes within the industry.