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What’s the point of a Letter of Intent?

November 26, 2019

 

Commercial real estate deals are complex, requiring research by both parties before committing to a contract.

Letters of intent (LOIs) are implemented in the beginning stages of a transaction to ensure there is a meeting of the minds on major deal issues. The LOI sets forth the material terms and business agreement of a commercial real estate lease. They are non-binding road map for negotiations.

Well-drafted, they can protect both parties and support effective negotiations.  

They should include:

 

1. Parties and Property: the complete legal names of the parties involved in the transaction, as well  as the property address and the property type fundamental items of a deal, including the parties and the type of property and location.

 

2. The economic terms: the rental structure, deposits and incentives.

 

3. Dates and Term: the date the premises will be delivered to the tenant, the commencement date and the rent commencement date, length of the term and any extension terms.

 

4. Client and Property-Specific Provisions

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