What is a commercial lease Letter of Intent?
A Letter of Intent outlines the main business terms before the lease is drafted. It is where many important economics and obligations first take shape.
What it means
A Letter of Intent, often called an LOI, summarizes proposed lease terms such as premises, size, rent, term, commencement date, tenant improvement allowance, free rent, renewal options, deposits, and contingencies.
Why it matters
The LOI is usually the first written version of the deal. If important issues are skipped, they can become harder to negotiate later when the lease document arrives.
Common mistakes
Common mistakes include focusing only on rent, ignoring buildout responsibilities, leaving timing vague, failing to address operating expenses, and assuming legal review can fix every business issue later.
What to validate
Validate rent structure, total cost, delivery condition, tenant improvements, timing, options, signage, parking, use clauses, assignment rights, and any conditions that must be satisfied before signing a lease.
Questions businesses usually ask
Is a Letter of Intent legally binding?
Often many business terms are non-binding, but some provisions can be binding. A qualified attorney should review the language.
Who prepares the LOI?
A broker often prepares the first draft, but the tenant should understand every business term before it is sent.