Cloud Computing’s Effect on Real Estate Legal Stipulations Associated with Cloud-Based Document Storage
As for those companies locked into long term leases signed long before Cloud Computing was in vogue, there should be some type of reassessment done to determine how to handle the extra space that may become available once a migration to Cloud Computing is undertaken. Landlords may not be inclined to help their tenants figure out that particular dilemma and they will be even less inclined to reduce their tenant’s rent in a manner commensurate with the reduction in square footage that results from the storage space not being utilized, however, off-site storage costs should be able to be reduced considerably once Cloud technology is adopted by a company. Off-site storage costs can be eliminated much quicker than on-site storage costs, provided that companies are able to identify, in a cost-efficient manner, those records that need to be preserved. Once the vital records that need to be preserved are identified, then the documents should be transferred into electronic form and stored in the Cloud for easy access. The remaining documents stored off-site should be destroyed.
Nevertheless, companies should be aware that certain legal issues control the storage of documents. That being said, it is important that the company’s legal department be aware of the law regarding the storage of documents in different jurisdictions before signing off on the destruction and/or complete electronic conversion of these documents. For example, in Connecticut, the law requires that records may be stored in either electronic or paper format, so long as the records can be accurately reproduced. However, New Jersey, requires that certain records related to real estate transactions be kept in paper format only and they must be located in the main New Jersey office of the particular company.
Cloud Computing is no doubt the wave of the future. Cloud technology in the real estate context can lead to greater space efficiencies for both real estate users and owners, while also lessening the impact that additional storage space can have on the environment (i.e., less paper being used, less materials being used in the construction of space, etc.). Real estate developers and builders will also be impacted by Cloud Computing. New real estate development projects will have to account for the direct impact that the remote storage of data will have on the size of these projects, while also mandating that space be more efficiently utilized.
* This is the first part in a two-part series which comprise an abridged version of the article “The Shrinking Effects of Cloud Computing on Real Estate,” written by Daniel Garrie and Edwin Manchuca published in the Los Angeles Daily Journal.