What’s the point of a Letter of Intent?
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