An early termination right on page 47 of an anchor lease can move a deal’s value more than anything in the offering memorandum. Moraine’s red flag detection reads every lease you upload for a target property and flags terms like that one for underwriter review. Each flag cites the page and section it came from. The feature runs inside Moraine’s lease abstraction workflow.
Why lease issues get missed
A single lease runs 50 to 200 pages, and a property usually comes with ten or more of them. Analysts read them against a deadline, attention fades somewhere in the third lease, and two reviewers given the same file will catch different things.
The clauses that slip through are rarely exotic. Termination rights let a tenant leave early. Exclusive use clauses block future leasing, and co-tenancy provisions cut rent when an anchor goes dark. Below-market renewal options, assignment restrictions, unusual expense structures and subordination language round out the usual list, and a lender will ask about that last one.
What Moraine flags
Detection looks for clauses that reduce value, provisions that depart from market standard, protections that should be in the lease and are missing, terms that conflict within one lease or across several, and compliance issues. Findings are grouped four ways.
| Category | Examples |
|---|---|
| Financial | Below-market renewal options, rent abatement, unusual CAM exclusions, percentage rent caps, tax gross-up limits |
| Flexibility | Early termination rights, contraction options, relocation restrictions, sublease and assignment limits, go-dark provisions |
| Value | Exclusive use clauses, co-tenancy requirements, ROFO/ROFR provisions, use restrictions, parking ratio requirements |
| Legal and compliance | Subordination, lease-mandated insurance the owner must monitor, ADA responsibility shifts, unusual environmental indemnification |
Every finding carries the exact quote, the page and section reference, a plain-language explanation, a High, Medium or Low severity rating, and a recommended action for the diligence team.
What a finding looks like
These three findings are illustrative. They show the output format and are not taken from a real deal.
Early termination right (Anchor Retailer, High) Section 14.2, page 47: “Tenant shall have the right to terminate this Lease effective upon the 60th month by providing Landlord with not less than 180 days prior written notice…” The anchor pays 35% of rent and can leave in year 5, which means re-tenanting risk and a likely lender question. Action: factor it into pricing and consider negotiating a termination fee.
Co-tenancy provision (Restaurant Co, High) Section 5.4, page 23: “In the event that fewer than 75% of the leasable area of the Shopping Center is open for business… Tenant’s Minimum Rent shall be reduced to 50% of the amount otherwise due…” If occupancy falls below 75%, the restaurant’s rent is cut in half, so one vacancy can trigger a second loss. Action: verify current occupancy and model the downside.
Exclusive use clause (Medical Group, Medium) Exhibit C, Section 2: “Landlord covenants that no other premises in the Building shall be used for the practice of medicine, dentistry, or related healthcare services…” No competing medical tenant can lease in the building, which narrows the field if this tenant leaves. Action: map the existing exclusives and confirm none conflict.
Why the citation matters
When a committee member asks where the lease says that, the answer should take seconds. Many lease review tools and services return summaries with no sources, and someone ends up back in the documents. Each Moraine finding links to its page, section and quoted text, and opens in the original document with one click. The underwriter checks the finding against the lease instead of taking it on trust.
Moraine publishes no accuracy percentage. The citation is how you check a finding, and a qualified reviewer should still check them before IC.
Where it fits in diligence
Red flag detection is one part of Moraine’s lease analysis, which also includes full abstraction, a tenant-by-tenant summary and cross-lease analysis. Lease analysis sits in a due diligence suite that covers document inventory, operating statement review, tenant credit, title and covenant screening, and capex and vendor review. The suite is $3,000 one-time per deal. Moraine builds the first draft, and an analyst reviews it before IC. The CRE due diligence software guide compares the platforms.
Acquisition teams use the findings to price risk before they make an offer. A termination right becomes a price adjustment. Co-tenancy exposure becomes a holdback, and a lease amendment the buyer needs becomes a closing condition. Lenders get documented lease analysis with citations for the key findings, and the same review works on a borrower’s rent roll. Moraine is an acquisitions and diligence tool, not a lease administration system.
Compared with manual and legal review
Manual review takes days, and the result depends on who did it. Moraine runs the same checks on every lease you upload and returns a cited first draft. Other lease tools differ on whether they flag risk at all, cite sources or rate severity, and most stand alone outside the diligence workflow.
Attorney review is still required. Moraine is a screening tool and gives no legal opinion; its job is to show counsel where to look, and complex or high-stakes findings go to counsel. Attorney time on a lease file costs high hourly fees. Moraine’s suite costs $3,000 per deal.
Related: Prophia alternatives | Lease abstraction software comparison