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What Should be Included in a Commercial Lease Letter of Intent?

The letter of intent to lease a commercial space should include:

  • The address of the commercial space

  • The term of the lease (length of time)

  • The commencement date

  • The rental amount

  • The rental payments (frequency and method)

  • The security deposit amount

  • The details of any fit-out or renovations to be undertaken by the tenant

  • The landlord’s and tenant’s contact details

The letter of intent is not a legally binding contract (like the most letters of intent), but it does set out the proposed terms of the commercial lease agreement. Both parties should read and understand the letter of intent before signing it.

How to Fill Out a Commercial Lease Letter of Intent?

A letter of intent for commercial leases should include some basic details of the future agreement so that the parties might negotiate the terms in a way that would fit the needs of both.

Step 1 – Information about the prospective lessor and lessee and the date

Include the name of the landlord, their return address, and phone number at the top left corner of the letter. Also include information about the tenant prospect beneath it. Include the effective date of the letter in the top right corner.

Step 2 – Term of the lease

One of the most important details that should be included in a letter of intent is the lease period.

Step 3 – Address of the commercial real estate

Next, write down the address of the commercial real estate.

Step 4 – Description of the premises

Next, describe the premises being rented. The description should involve its size in square feet and legal specifications, for example, data from the public records.

Step 5 – The amount of rent

The lease should tell how much rent the lessee will pay. The rent price should be outlined in the commercial lease letter of intent. To clarify how often the tenant should pay, mention both the price per time frame in words and numbers.

Step 6 – Expected expenses

The letter has to state that the tenant should also pay any additional expenses along with the base rent. Also, there is a need for the provision about the tenant being penalized for paying rent late.

Step 7 – Renewal of the agreement

The letter of intent should include the details of whether or not the lease will be renewed and if so, the terms and conditions of the renewal. The section should explain what the tenant should do if this is allowed, such as sending a written notice prior to the expiration of the lease.

Step 8 – Leasing the commercial real estate to third parties

Next, the section should explain whether or not the tenant can sublet the commercial property.

If so, the tenant should provide a prior written notice and provide details of who will be using the commercial property. A landlord might specify in the letter of intent that subletting can only happen with written notice prior to the sublet.

If the landlord does not allow subletting, he or she needs to mention that in the letter.

Step 9 – Binding force

The landlord should clearly indicate in the letter whether it is legally binding or not. Both parties need to know if they have to enter into a more solid agreement at a later date.

Step 10 – Rent increase

The landlord should include a section explaining that, if the tenant wants them to renew the lease, they will be increasing the rent.

Step 11 – Effective law

The landlord should mention what law applies to the tenant and landlord. Usually, it is the law of the state where the rental space is located.

Step 12 – Agreeing to the terms of the letter

The letter needs to confirm that the tenant and landlord must both sign this document to indicate acceptance of the terms and conditions. The landlord and tenant each must sign their name at the bottom of the letter, and then send a copy of the signed letter back to the other party.

Step 13 – Signatures

The names of the parties and their signatures make up the last portion of a letter of intent. They must be included for the letter to be considered valid.

Why Create a Commercial Lease Letter of Intent?

A commercial letter of intent is a key document in the leasing process. It ensures that both the landlord and tenant are on the same page regarding the proposed lease agreement. By signing the letter of intent, both parties are agreeing to negotiate in good faith to reach a final lease agreement. This can help avoid disagreements or misunderstandings further down the line.

When Should a Commercial Letter of Intent Be Used?

A commercial letter of intent should be used whenever a tenant is interested in leasing commercial real estate from a landlord. It can be used for all types of commercial property, including office space, retail space, industrial space, and more.

If you’re a property owner, you can use a letter of intent template to save time drafting your own letter. And if you’re a tenant, a commercial letter of intent can give you some negotiating power during the leasing process.

What are the consequences of not using a commercial lease letter of intent?

If you don’t use a commercial lease letter of intent, you’re more likely to experience disagreements or misunderstandings with your landlord or tenant. This could lead to a delay in the leasing process, or even cause the deal to fall through entirely.

A commercial lease letter of intent is a simple but important document in the leasing process. It ensures that both parties are on the same page and agree to negotiate in good faith. This can save time and prevent disagreements further down the line.