Should I Use an LOI Template for My First Commercial Lease?

By Staff Reporter

Oct 18, 2019 12:30 PM EDT

Should I Use an LOI Template for My First Commercial Lease?(Should I Use an LOI Template for My First Commercial Lease?) (Credit: Getty Image)

Sometimes free can cost your business a lot of money. Just because there is an entire world of free templates and downloads out there, doesn't mean you should use them. So, are online templates for a letter of intent (LOI) safe to use?

Yes, they can be. Like most legal contract templates you will find for small businesses, the danger is not in the template itself. The danger is forgetting (or not knowing how) to include crucial sections.

If you're reading this, you probably don't know how to write a letter of intent for a commercial lease. And that's Ok. We're going to walk you through what you need to ensure is included in your template.

Do I Need an Introduction?

Your LOI template may start with an introduction. If you're bidding on a much sought after property, a really well-crafted and professional introduction can help you stand above the competition.

This is your opportunity to explain why you would be a great tenant and why the space is perfect for your needs. Don't be afraid to brag here. Your would-be landlord would love to know that you have great credit, high income, or promising growth.

Don't be afraid to sell yourself a little bit here. This could get you on the shortlist of candidates.

Add the Specifics

Start by adding the information you already have. You can pull a lot of it from the commercial real estate listing itself. This can include:

  • Square footage

  • Rental rate

  • Lease type and term

If you've had any further discussions about other items, feel free to add them. That may include:

  • Tenant/ landlord improvements

  • Security deposits

  • Commencement date

Be careful with the square footage, as your landlord may request the right to re-measure it. The funny thing about a re-measure is it is almost always larger than the initial one, which leads to possibly paying more rent.

Ensure Your LOI is Non-Binding

You also need to make it clear that your LOI is not legally binding. This is not your final lease, this is basically your negotiation playing out over paper, as you and your would-be landlord add and remove items.

It's assumed that most LOIs are non-binding, but be sure to make that explicitly clear.

Intent Expiration

Ensuring this is in your lease is good when you're in a bit of a time crunch. First of all, it allows you to move on quickly from any would-be landlords that aren't that interested and wasting your time.

Your typical expiration is between 5- 10 days. However, you can shorten that up to 3 days if you're looking at multiple properties.

Personal Guarantee

Your template may come with a section that talks about a personal guarantee, or your new landlord may insist that adding one is a deal-breaker for them.

Making yourself personally responsible to pay off the remaining rent in case of a default is almost always taking on too much personal liability.

You can still help the landlord protect their interests by shortening the terms to 6 months instead of the entire length of the lease, or doing other things like increasing your deposit amount.

The most dangerous LOI template is one that you don't understand. If you're new to this process, always be sure to work with a commercial lease expert who can walk you through the process and flag any potential issues.

Because a bad LOI can lead to a bad lease!

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