Letter of Intent for Commercial Lease Template

Letter of Intent for Commercial Lease Template

[Landlord Name or Landlord Legal Entity]
[Street Address]
[City, State/Province, ZIP/Postal Code, Country]
Phone: [Landlord Phone Number]
Email: [Landlord Email Address]

[Date]

[Tenant Name or Tenant Legal Entity]
[Street Address]
[City, State/Province, ZIP/Postal Code, Country]

Re: Letter of Intent for Commercial Lease – [Building Name, Property Address, Suite/Premises]

Dear [Tenant Contact Name or “Sir/Madam”],

This Letter of Intent (“LOI”) sets forth certain preliminary terms and conditions under which [Landlord Legal Name] (“Landlord”) and [Tenant Legal Name] (“Tenant”) are prepared to negotiate a commercial lease for the premises described below (the “Premises”). Except as expressly stated in Section 12 (Binding and Non-Binding Provisions), this LOI is intended as a non-binding outline of key business terms and a basis for preparing a formal commercial lease agreement (the “Lease”).

1. Parties and Premises

1.1 Landlord
Landlord Name: [Landlord Legal Name]
Entity Type (if applicable): [Corporation / LLC / Partnership / Individual / Other]
Landlord Address: [Landlord Address]

1.2 Tenant
Tenant Name: [Tenant Legal Name]
Entity Type (if applicable): [Corporation / LLC / Partnership / Individual / Other]
Tenant Address: [Tenant Address]

1.3 Building and Premises
Building Name (if any): [Building Name]
Building Address: [Street Address, City, State/Province, ZIP/Postal Code, Country]
Premises: [Suite/Unit Number, floor(s), or area description]
Approximate Rentable Area: [Square Feet / Square Meters] (subject to landlord’s measurement standard)
Property Type: [Office / Retail / Industrial / Mixed-Use / Other]

2. Lease Term and Commencement

2.1 Initial Lease Term
The initial term of the Lease is expected to be:

Initial Term: [Number] years

2.2 Commencement Date
The lease commencement date (the “Commencement Date”) is anticipated to be:

Commencement Date: [Date] or [Description, e.g., “the later of substantial completion of Landlord’s work and [specific date]”]

2.3 Rent Commencement
Rent will commence on:

Rent Commencement Date: [Same as Commencement Date / [Number] days after Commencement Date / Other]

3. Use of Premises

Permitted Use: [General office use / Retail store / Restaurant / Medical office / Warehouse and distribution / Other commercial use]

The final permitted use language will be set forth in the Lease and must comply with applicable laws, zoning, and any existing use restrictions or exclusive-use rights in the building or center.

4. Base Rent and Additional Rent

4.1 Base Rent
The initial annual base rent (the “Base Rent”) is expected to be:

Base Rent: [Currency and Amount] per year, payable in equal monthly installments of [Currency and Amount] in advance on the first day of each month.

4.2 Rent Adjustments / Escalations
Base Rent is expected to increase as follows (if applicable):

• [Example: “Base Rent shall increase by [__]% on each anniversary of the Commencement Date.”]

• or [“Base Rent shall follow the schedule in an attached rent schedule.”]

4.3 Operating Expenses / Additional Rent
The lease is intended to be structured as:

☐ Triple-Net (NNN) – Tenant pays Base Rent plus Tenant’s share of property taxes, insurance, and operating costs.
☐ Modified Gross – Base Rent includes certain operating costs, with Tenant paying specified extras.
☐ Full Service Gross – Base Rent includes most building operating costs, subject to expense stops as described below.
☐ Other: [Description]

Tenant’s share of operating expenses, common area maintenance (CAM), real estate taxes, insurance, utilities, and other charges (collectively, “Additional Rent”) will be defined in the Lease.

5. Security Deposit and Guarantees

5.1 Security Deposit
Tenant will provide a security deposit in the amount of:

Security Deposit: [Currency and Amount]

The form (cash, letter of credit, or other) and return conditions will be set out in the Lease.

5.2 Guaranty (If Applicable)
If required, the Lease will be supported by a guaranty from:

Guarantor Name(s): [Individual or Entity Guarantor]
Type of Guaranty: [Full / Limited / “Good Guy” / Other]

6. Tenant Improvements and Condition of Premises

6.1 Delivery Condition
Landlord expects to deliver the Premises in the following condition:

☐ “As-is” condition, with existing improvements.
☐ Landlord’s work to provide a basic “building standard” condition.
☐ Landlord to complete specified work: [Short description of agreed Landlord work].

6.2 Tenant Improvements
Tenant may perform interior improvements (“Tenant Improvements”) subject to Landlord’s approval of plans and compliance with the Lease.

Landlord Contribution / Tenant Improvement Allowance (if any): [Currency and Amount]

Basic parameters for design standards, allowance usage, and timing will be set out in the Lease or in a work letter attached to the Lease.

7. Operating Hours, Access, and Services

Landlord will provide building access and basic services as customary for comparable properties in the area, which may include:

• Building access hours: [Example: “24/7 access for Tenant, with staffed or controlled lobby hours of [hours]”].

• Standard HVAC service hours: [Days and times].

• Elevator service (if applicable).

• Cleaning and trash removal for common areas (and, if applicable, Premises).

Details, charges for after-hours services, and any service standards will be described in the Lease.

8. Options and Rights (If Any)

Subject to the Lease, Tenant may have some or all of the following rights, as negotiated:

• Option(s) to renew or extend the Lease term: [Number and length of options, if any].

• Right of first offer or first refusal on adjacent space: [Description, if applicable].

• Expansion rights or contraction rights: [Description, if applicable].

The specific conditions, timeframes, and pricing mechanisms for these options will be set out in the Lease.

9. Insurance, Maintenance, and Repairs (Summary)

The Lease will include standard commercial provisions regarding insurance and maintenance, generally including:

• Landlord responsibility for structural components, roof, building systems, and common areas (subject to cost recovery through operating expenses).

• Tenant responsibility for interior maintenance and repairs within the Premises, and for any damage caused by Tenant or its occupants.

• Tenant obligation to carry commercial general liability insurance, property insurance for its personal property and improvements, and any required business interruption coverage, naming Landlord as an additional insured as applicable.

10. Brokerage

Landlord is represented by: [Landlord’s Broker Name or “None”]
Tenant is represented by: [Tenant’s Broker Name or “None”]

Responsibility for any brokerage commissions or fees (if any) will be allocated as agreed in separate brokerage agreements or as confirmed in the Lease. Each party will be responsible for any fees owed to brokers not disclosed above.

11. Timeline and Next Steps

11.1 Draft Lease
Based on this LOI, [Landlord / Tenant] (or its legal counsel) will prepare a draft of the Lease reflecting the business terms summarized here, as modified by any further negotiations.

11.2 Target Dates
The parties currently anticipate the following non-binding timeline:

• Execution of this LOI: on or about [Date].

• Exchange of initial Lease draft: by [Date].

• Completion of Lease negotiations and execution: by [Date].

• Target Commencement Date / Occupancy: on or about [Date].

12. Binding and Non-Binding Provisions

12.1 Non-Binding Business Terms
The parties acknowledge and agree that, except as expressly stated in Section 12.2, this LOI is a statement of current intentions only. It does not create a binding obligation to enter into the Lease or any other agreement, or to proceed with the proposed transaction. Either party may discontinue negotiations at any time, subject to the Binding Provisions below.

12.2 Binding Provisions
The parties intend that the following provisions of this LOI will be legally binding once this LOI is signed and delivered by both Landlord and Tenant:

• Confidentiality of the terms of this LOI and any non-public information exchanged in connection with it, except as required by law or as needed for internal approvals, financing, or professional advice.

• Any exclusivity or “no-shop” provision the parties choose to add in this Section 12.2.

• Section 13 (Governing Law and Dispute Resolution).

• This Section 12.2 itself.

[Optional Exclusivity: “For a period of [Number] days from the date of Tenant’s countersignature below (the ‘Exclusivity Period’), Landlord will not enter into a binding lease for the Premises with any other party.”]

All other terms in this LOI are non-binding and may be changed, supplemented, or omitted in the Lease.

13. Governing Law and Dispute Resolution

This LOI (to the extent of the Binding Provisions) will be governed by and construed in accordance with the laws of:

Governing Law: [State/Province, Country]

Any dispute arising out of or relating to the Binding Provisions of this LOI will be resolved in:

Dispute Resolution Forum: [Court or Arbitration Forum and Location]

14. Expiration

If this LOI is not signed by both Landlord and Tenant on or before:

Expiration Date: [Expiration Date]

it will expire and have no further effect unless extended in writing by both parties.

15. Signatures

If the terms of this LOI are acceptable as a basis for preparing the Lease, please sign below to indicate your agreement to the Binding Provisions in Sections 12 and 13 and your agreement in principle to the non-binding business terms described above.

Landlord

[Landlord Legal Name]

By: _______________________________
Name: [Authorized Signatory Name]
Title: [Title]
Date: [Date]

Tenant

[Tenant Legal Name]

By: _______________________________
Name: [Authorized Signatory Name]
Title: [Title]
Date: [Date]