AI in Contract Management: How Contract Data Abstraction AI Benefit Property Agents

Did you know that around 75% of business operations in real estate require contract management? As businesses grow, so does the complexity of contract management processes and the volume of documents they must deal with. And this is when AI for contracts comes to help. Yes, AI in contract management is poised to reshape how real estate organizations handle documents, offering unparalleled efficiency, accuracy, and legal compliance.

Let’s delve into contract AI, its types, and how contract analysis AI streamlines the most vital aspects of real estate contract management in the article below.

What is AI in Contract Management?

AI in contract management encompasses technologies based on natural language processing and machine learning and used in various industries to streamline and automate contract lifecycle management (CLM) processes like contract creation, review and analysis, negotiation, risk assessment, and compliance analysis.

Since real estate professionals frequently need to revisit their leases, analyzing them and searching for critical elements such as dates and conditions, the contract management can sometimes feel like an endless cycle. Most often, agents without specialized contract AI technologies turn to ChatGPT to perform activities like ChatGPT contract analysis, but tools like that offer no security or PDF/jpeg recognition. That’s why we believe that AI in contract management is a solution that can revolutionize each CLM stage, i.e.:

• Document Generation
• Contract Approval
• Contract Signing
• Contract Storing.

Types of AI Contract Management Software

 

AI Contract Generation Software

AI contract generation software is a solution that developed on artificial intelligence and natural language processing capabilities, allows real estate professionals to streamline and automate their contract generation and document management process.

As the most common type of contract analytics software, AI contract generation tools often include template libraries, clause libraries, audit trails, electronic signatures, user permissions, and notifications & reminders. It can also perform contract compliance analysis and easily integrate with tools like CRMs for data extraction.

Contract Review AI Tools

Contract review AI is an NLP-based solution that helps real estate professionals streamline the review and analysis processes of contracts and agreements. Contract review AI might not come with a contract generation module or real time negotiation capabilities, but it offers clause analysis, hence risk assessment, helping real estate professionals identify non-standard clauses or deviations from the law.

AI Contract Creation & Review Software with Collaboration Features

Often called ‘contract collaboration AI,’ such software is an AI for contract creation or review with a negotiation capacity that includes features like version control, audit trail, and document tracking.

This means that teams can add new data, clauses, and terms while collaborating on the document content in real time. And with version control as mentioned, you can go back to the previous version if you’re unhappy with the latest changes made by the team.

Contract Compliance AI

Contract compliance AI is an NLP-based solution for real estate professionals who need to perform compliance checks on property agreements, leases, and transactions, ensuring that they meet legal requirements and industry standards.

When using contract compliance AI software, real estate professionals can customize the rules and analysis criteria relevant to their geographic location. Just like automated contract review tools, contract compliance software determines potentially problematic cases, flags them, and suggests how they can be improved.

What is Contract Data Abstraction AI?

Contract data abstraction AI is a solution that combines artificial intelligence and natural language processing for automatic summary generation of complex legal contracts and agreements in real estate like purchase and sale agreements, lease agreements, construction contracts, and others.

For example, lease agreements are long and complex documents that are difficult to comprehend. That’s why it’s much more efficient to use lease abstracts to get the main gist of the wordy contracts. Lease abstraction AI helps real estate professionals save time and prevent misunderstandings by leveraging OCR and NLP for fast and precise lease summaries.

Why can’t you miss contract data abstraction AI as a real estate specialist?

In 2019, a contest pitted AI against a team of five U.S. lawyers. Their challenge was to identify loopholes in legal agreements as quickly as possible. AI completed the task in 26 seconds, while lawyers continued to work for an additional 92 minutes. And when it came to efficiency, AI detected 94% of the loopholes, whereas humans identified only 85%.

Instead of wasting your time on reading contracts and detecting errors manually, you can delegate these tasks to contract data abstraction AI. Just imagine – what if you’re having 5 meetings with potential buyers, and each of them requires you to read a contract or two?

How Does Contract Data Abstraction AI Work?

Well, most contract data abstraction AI tools have a user-friendly interface and require a user to:

• Users register and authorize;
• Upload the lease document onto the docuemnt abstraction AI platform;
• Set up pre-defined prompts;
• Check the handwritten parts transcribed by the tool and manually confirm their accuracy;
• Review and edit the summarized document to ensure that it accurately reflects the information in the original lease document.
• Finalize and download ready lease abstract.

All you have to do is wait for the magic to happen. In a few minutes, you’ll get a concise accurate summary of the document, filled with details like payment terms, prices, effective date, parties, and others.

Contract Data Abstraction AI Features

Please note that most contract management AI tools don’t come in their purest form. For instance, if you opt for contract generation software, it might come with an automated contract review mode and vice versa. Likewise, most contract data abstraction AI tools will include the contract generation and review functionality.

The same goes for the features listed below – they can be found not only in contract data abstraction AI but in other contract management AI tools as well.

• User registration and authentication.
• Data extraction capabilities powered by Optical Character Recognition (OCR) technology;
• Customizable abstract templates with the option to create new templates from scratch;
• Version control and audit trails to track document versions and changes made over time;
• User access control with role-based access control and the ability to assign read-only rights or review/edit rights to users;
• Secure storage for documents in the cloud with easy retrieval capabilities;
• Integration capabilities with other systems through APIs and integrations with systems like CRM or company software.
• Electronic signatures to sign documents online without a need to visit the broker’s office;
• Alerts & notifications. The software flags causes or terms/conditions that deviate from the norm, it will notify the user. Additionally, some contract AI tools can send “sign” notifications, so no deadline is missed;
• Law compliance checks to ensure the clauses comply with industry standards and regulations;
• AI-powered automated translation for global real estate operations;
• Reporting and analytics features for insights into extracted data and lease trends.

We at Ascendix have developed our own robust framework for real estate contracts and other document abstraction powered by the latest AI technologies.

Document abstraction is a part of a wider process called Intelligent Document Processing. IDP covers key steps in document management including data extraction, abstraction, handwritten text recognition and conversion into digital editable one, document categorization, and even automated data entry to your CRM or company software.

Ascendix’s framework can be a solid basis for your custom AI contract management tool with lower cost and faster development time.

Document Classification AI

Document classification AI is another example of using AI in contract management to automatically categorize and organize documents. Paper-heavy industries like real estate, finance, and healthcare benefit the most from such tools. The AI algorithm analyzes the document’s layout, text, and visual content and assigns a label or category to it, making it easier to search, access, and manage the documents.

Contract Data Abstraction AI Limitations

Inability to Process Large-Volume Documents

Most contract data abstraction AI tools are designed for processing individual documents. So, when it comes to the company’s archives or large-volume documents, the system might be difficult to use, and instead of feeding the entire archive at once, you’ll have to process each contract separately.

Lack of Handwritten Text Recognition Technology

Sure, most contract data abstraction AI tools will process the handwritten parts, but the question is – will it be seamless? Currently, this step requires the user’s manual check and confirmation for higher accuracy.

Low Accuracy of Generated Summaries

With sophisticated NLP algorithms and vector databases, the chances of the system presenting false information are low. Still, they may not always capture the nuances or context, hence offering results with errors and omissions.

Poor Training Data

The efficiency of contract data abstraction AI tools heavily depends on the data they’ve been trained during the development stage. If the data wasn’t highly relevant and didn’t include a broad spectrum of contract types or legal language variations, the tool’s performance might be compromised.

 

Who Can Benefit from AI in Contract Management within Real Estate?

 

Real Estate Agents

Brokers have a lot on their plate when it comes to document management, specifically documents like:

• Listing agreements. Amidst the document organization ‘crisis’ (for instance, when data is kept on multiple devices or digital storages), AI in contract management offers a centralized repository and integrates with tools like CRM. You no longer need to manually look for property details but can entrust the tool with extracting it from your CRM. And you won’t lose a bit of data during your meeting with a client – with complex search functionality based on natural language processing models (NLP), you can find any piece you need by keywords in a matter of seconds;
• Purchase agreements. This is the case when terminology and clauses matter. AI contract review can help you identify terms and conditions that are ‘foggy’ to understand or sound contradictory. Some contract analytics software will even suggest how you can change the document, so the terms and conditions are more straightforward and comply with the law;
• Property disclosures. Accurately disclosing property defects is a must for determining the right price and selling fast. After a property disclosure is provided by a seller, an AI contract review system will scan the document and identify inconsistencies, such as differences in the number of rooms mentioned. You don’t want the buyer to think they’ve bought 7 rooms then, in reality, the house provides only 4, right?
• Mortgage and loan documents. This is where deadlines matter. Contract analytics software offers high document traceability and allow users to set deadlines and reminders so that no deadline is missed. You can easily track who and when signed the document and move it from one pipeline stage to another;
• Title documents. Ensuring the property ownership’s history is clear is key to confirming a legally sound transaction with no future disputes. Again, AI contract review software helps users detect inconsistencies in the document data and act on time;
• Lease agreements. If you fail to mention such vital data as security deposits in the document, it can lead to potential legal complications down the line. A contract AI tool will check whether all data is mentioned without contradictions if you’ve created a document from scratch and flag the places to fill in if you’re using a template.
• Closing documents. Most CLS AI software in real estate offer electronic signatures – you no longer need one-on-one meetings (what if your client is currently in a different state?). Also, electronic signatures help you meet deadlines; no missed deadlines – no missed commissions.

Property Managers

• Lease agreements. Like brokers, property managers have to ensure that the lease terms and conditions are clear as well as the responsibilities and rights of both parties. Here, contract AI tools can help you generate lease contracts and add new clauses during reviews that fully comply with the law (which, as you know, differs from state to state). You can also quickly find lease agreements with similar clauses and use them as templates without a need to create a new one from scratch;
• Property inspection reports. With pre-templates, contract analytics software ensures your property inspection includes all details. And if you forgot to mention the condition of the walls – it will remind you with a list of aspects to fill in;
• Property maintenance reports. Again, with a pre-defined property maintenance report, you’ll never forget to check all the nooks and crannies of the apartment. Plus, you can store the historical data for future comparative analysis;
• Move-in and move-out inspection checklists. Some AI tools for contracts offer voice-to-text capabilities, so you can make notes during the inspection fast. Additionally, a comprehensive record of inspection checklists, photos, and timestamps helps property managers resolve disputes.

Other than that, property managers can easily generate and review other documentation like security deposit records, insurance documents, and financial statements with adherence to legal requirements.

Construction Teams

• Contracts. A well-defined contract template with a clear scope of work and parties’ responsibilities determines the success of the project. What if you forget to outline deadlines or one of the teams refuses to follow their responsibilities because the contract doesn’t list them? Here, contract AI tools will help you outline parties’ obligations and ensure your contract includes all vital details like prices and deadlines;
• Permits and approvals. When you get permits and approvals from third parties, you can easily store them in the contract AI repository and access them any time you or your team needs them;
• Project proposals. Some contract AI tools allow users to generate documents and save them as templates, so you don’t have to create proposals from scratch each time a new project starts;
• Safety and incident reports. Contract data abstraction AI helps construction managers ensure that the construction site complies with occupational health and safety regulations; and if an incident occurs, they can generate and send an incident report in a matter of minutes without missing a detail;
• Closeout documents. Construction managers can easily manage warranties, operation and maintenance manuals, and record drawings provided by contractors upon project completion.

Investors

• Financial statements. Though contract AI tools commonly don’t come with built-in calculators, they can extract and analyze the numerical data within financial statements while also withdrawing data from other systems like CRM and automatically pre-populate templates;
• Investment agreements. Along with document generation and data extraction, contract AI tools are based on natural language processing or NLP models, meaning that they can analyze the language used in investment agreements to identify critical clauses, obligations, and potential risks to the parties. For instance, they can detect ambiguous terminology like ‘total price’ used along with ‘purchase price’;
• Partnership agreements. Contract AI software can flag clauses that deviate from standard industry terms or local regulations and provide suggestions or alerts to real estate professionals. Plus, investment teams can collaborate on reviewing and modifying agreements in real time.

Other documents that real estate investors can manage with contract AI software include loan agreements, annual reports, tax documents, offer letters, and others.

AI Contract Analysis Tools Already on the Market

Juro

Year: 2016

Type: AI contract analysis

Juro’s legal AI assistant is a contract analysis AI tool developed for legal, HR, sales, and finance teams. Users can set guardrails and conditions to generate terms and clauses in a chat-like manner with commands like “Please draft me a termination clause for “name or type of the contract”. And if you like the result, you can press the ‘Insert’ button, and the contract will include it.

Users can scan documents for further risk assessment (for instance, if the document is arranged according to South Dakota laws instead of New York ones, the tool will detect inconsistencies). Further, users can summarize contracts in different formats and negotiate them in real time with Juro’s collaboration platform.

What about the drawbacks? Though most users rated Juro 5 out of 5, some notice poor comment traceability and document duplicates. Others suggest that Juro should add more visibility on how long the client views the contract.

Our wrap-up: Can we suggest Juro for contract management to real estate professionals? Absolutely! First, we’ve found out that real estate giants like WeWork use Juro to manage their contracts. Second, Juro takes into account each step of the contract lifecycle management: you can generate contracts with Juro’s template editor, keep control of contracts from draft to signature, review them in real time, and get contract reminders.

DocuSign Insight

Year: 2018

Type: Contract analysis tool for risk assessments

The household name for the #1 eSignature software, DocuSign has introduced a new product – DocuSign Insight or AI for contracts – positioned as an AI risk assessment tool. The contract analyzer is built on machine learning, natural language processing, and rule-based logic.

With automatically created searchable index of all agreements extracted from multiple company’s systems and stored in one place, users can get better document visibility, easily find & filter documents, and conduct comparative AI contract analysis.

What are the drawbacks? Most users rate the tool 5 out of 5. However, some of them say that there is no bulk document submission in the basic package and the pre-approved clause library should be reviewed. Others suggest that it would be great if the tool could resend documents to users who have missed reviewing them.

What is our wrap-up? DocuSign Insight lacks contract summary and contract generation functionality. It is perfect for businesses that have to review agreements daily, conduct comparative analysis (for instance, compare clauses across multiple contracts – you can view contracts side-by-side), and analyze documents – you can visualize data with customizable report dashboards.

However, we don’t recommend the tool to businesses whose operations heavily rely on document creation from scratch and summarization.

Summize

Year: 2018

Type: Artificial intelligence contract analysis

Another 5-star contract analysis AI tool designed to simplify document management with automated summaries. The company claims that Summize users speed up contract reviews by 85%.

An all-in-one solution, the tool offers ‘Legal Frontdoor’ where commercial users can enter conversations with chatbots integrated with Microsoft Teams and Slack and build contracts by using pre-approved templates and answering questions.

If the user needs legal advice, they can form a request, and it will go directly to the legal team. Yes, you can create and track tasks as well, build summaries and share them with others.

As a contract analysis tool, Summize offers flawless risk assessment, highlighting areas that need to be improved – and everything is done in a ‘Microsoft Office’ style which lawyers are so used to working with.

Are there any drawbacks? We were pleasantly surprised to find out that Summize has the lowest number of negative reviews on tech review platforms. The only tiny drawback is that moving a contract internally from Requests to Repository is impossible.

Our wrap-up: Summize seems to be the best software that is easy to set up and use with its chatbot functionality, which is great news for non-experienced tech users.

Suffice it to say, Summize has all contract AI functionality required for efficient document management – generation, summarization, review, and negotiation.

It integrates with Teams, Slack, and Microsoft Office – so if you’re using these tools already, you’ll obviously benefit from Summize. You can also share the contracts with stakeholders via a read-only link. And it also integrates with Salesforce – so, if you’re a real estate company using this platform, definitely try Summize.

Legly

Year: Around 2021

Type: Contract review AI tool

Legly is a contract review AI tool that helps businesses organize and analyze their contracts.

The process is simple. You feed the document to the contract analyzer and wait till Legly identifies problematic clauses, and if some clauses are missing – you’ll get notified. Let’s say there is liquidated damage in the contract. The system will identify it and provide you with an area where you can type in commands like ‘Please remove them’, and the tool with delete them in this case. Or if there is a non-solicitation clause that should be edited, you can type in commands like “Please take out the two years.”

After you complete the review, save the document, upload it and share with others if needed.

Need to analyze your contracts? Use Legly dashboard for that purpose.

Are there any drawbacks? Since Legly represents AI startups in real estate, it hasn’t got many users to explore the tool and leave comments. The only drawback mentioned is that the free version of the tool allows users to conduct 2 contract reviews.

Our wrap-up: Due to the lack of data on the tool’s efficiency (again, Legly is a startup), we can only base our opinion on the tool’s presentation and a few users’ reviews. The first thing to outline is that Legly is strictly a contract review AI tool, so if you’re dealing with contract generation and summarization daily, better switch to another contract analyzer. But if you need a contract AI review tool solely – opt for Legly. With its user-friendly design and straightforward functionality, Legly will be a valuable addition to your toolkit.

Imprima

Year: 2001; introduced Imprima AI in 2021

Type: Contract summary AI

Driven by AI and machine learning, Imprima offers automated document summaries for AI powered contract management.

Choose the items from the list that should be mentioned in the summary (the tool offers 35 pre-set fields like “lease space,” “signing date,” “extension period,” “price,” etc.). The field with definitive values (items from the list you’ve chosen) will appear in the right part of the screen right beside the open document. You can press the values in the list to locate them in the document, assign different values to text parts, and add new values.

Once you’re happy with the summary, you can confirm to train the AI, so the tool gets more attuned to your contract management processes.

You can also filter the documents based on aspects like price and end date and export results to Excel.

Other than that, Imprima can paraphrase clauses during contract reviews and help you generate visually appealing reports for your clients.

What are the drawbacks? Some users report non-user-friendly interface.

Our wrap-up: Imprima is a contract data abstraction AI, that focuses narrowly on real estate. When it comes to documentation, Imprima’s Smart Summaries’ AI processes real estate lease agreements, software license agreements, and mortgage/loan contracts in any language and in any jurisdiction. So, yes, we definitely advise you to add Imprima to your company’s toolkit.

There is no such tool as perfect contract data abstraction AI, but we believe that Ascendix has accumulated enough expertise and proptech development experience to help you try to create one.

How Can Ascendix Help You Embrace Contract Data Abstraction AI?

Since 1996, Ascendix has been a pioneer in business automation, actively involved in the real estate industry for over two decades. We’ve been closely following the development of AI from its inception and have cultivated expertise in proptech development to help real estate companies upgrade their business operations with state-of-the-art technology solutions.

Why do real estate players like JLL trust Ascendix?

• We’ve got 2 decades of real estate expertise and 16+ years of proptech development experience;
• We’re based in Texas, but serve real estate businesses globally;
• With 5 international offices, we offer cost-effective strategies.

How can we help you with contract AI adoption?

• If you’re a startup with a groundbreaking idea, we can help you realize it with MVP development or audit & test the software you’ve already built;
• If you’re an investor looking for a new investment opportunity, we can assist you with startup MVP assessment and tech audits;
• If you’re a real estate player with legacy systems requiring integration with AI tools – we can leverage our knowledge in APIs and legacy system modernization to ensure seamless and efficient incorporation of AI into your existing infrastructure.

Fascinated with how AI can transform your operations? Contact us to learn more or book a call.