Creating and agreeing to lease agreements can be a difficult and time-consuming task. Commercial leases in particular present many different obstacles when trying to agree on the specific terms. In order to tackle the issue head on, parties can draft and agree to what is known as a letter of intent.
A letter of intent is an important document that is signed by both parties before a formal lease is executed. In fact, it is often the first step towards creating a commercial lease agreement. The letter indicates that both parties intend to go through with the lease and includes important terms and agreements of the future lease. Due to the nature of its content, it is crucial to create an error-free letter of intent, for both parties’ sake, in case the deal does not go through.
This document often is not a final agreement on each and every term that will be included in the formal lease, but it does create an outline of the forthcoming contract. Popular terms that are included in letters of intent include the identity of the landlord and tenant, the base rent, security deposit, and the duration of the lease.
In general, these documents are considered non-binding, and are seen merely as a tool to expedite the negotiation process. However, some terms and provisions of the letter can be made binding on the parties. A common example of a binding section of a letter of intent is a confidentiality provisions. These provisions provide for protection if the deal did fall through. The terms, party information, and other sensitive information would be kept confidential afterwards.
If you have questions regarding this article, or any other business needs, please feel free to contact The Wagoner Firm, PLLC for a free consultation.