A letter of intent to lease commercial property is a letter that is prepared by a landlord with the intention to offer to a tenant the basic terms and conditions of the future lease agreement. It serves as the basis for the further comprehensive agreement between a landlord and tenant but might already act as a binding agreement if the parties decide so.
A tenant who gets this form has to either accept or decline the terms. The acceptance of the terms has the form of a signature.
The letter of intent to purchase real estate helps both parties enhance the process of negotiations and learn each other’s expectations before they enter into a formal agreement.
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A letter of intent is the best chance for a landlord and tenant to learn each other’s intentions better. This is why to reach an agreement, a landlord or property manager should write a letter according to certain requirements:
Step 1 – Information about the parties and the effective date
In the top left corner of the letter, include the name of the landlord, their return address, and contact information.
The same information about the prospective tenant should be included beneath it.
As well as that, mention the effective date of the letter.
Step 2 – Address of the premises
Next, write down the location of the rental space.
Step 3 – Lease term
The duration of the lease is one of the most important details that should be included in a LOI. It should tell when the lease starts and expires.
Step 4 – The purpose
Further, the LOI should specify how the leased premises will be used.
Step 5 – Rent price
The next step is to mention what amount of money the tenant should pay at a certain frequency. It is recommended to write the price both in text and numerically.
Step 6 – Late rent
In a LOI, there should also be a provision about what is considered late rent and what penalty the tenant will be charged if they don’t pay rent on time.
Step 7 – Expenses
This section should tell what additional expenses the tenant should pay along with the base rent. It might be common area maintenance or any other costs related to the rental property.
Step 8 – Security deposit
This part of the LOI should specify what amount of money will be paid to the landlord as the security deposit.
Step 9 – Renewal of the lease
The next information to include is whether the tenant can renew the lease at the end of its term. The section should tell what the tenant should do if the renewal is allowed (generally, send a prior written notice).
Step 10 – Subletting
The next detail in a LOI might be the landlord’s consent or non-permission to sublet the rental space. If subletting is allowed, the landlord might mention that it can happen only with a prior written notice of the tenant.
Step 11 – Rent increase
The landlord should include a section about the rent increase in case the tenant wants them to renew the lease.
Step 12 – Binding effect
The letter should clearly state whether it is binding or not so that parties understand whether or not they should create a more comprehensive agreement in the future.
Step 13 – Governing law
The landlord should mention what law is considered governing for the tenant and landlord. Typically, it is the law of the state where rental space is located.
Step 14 – Acceptance
It is also important to specify in the letter of intent how the landlord will understand that the tenant accepted their terms. Typically, it is signing the letter by the tenant and sending a duplicate copy of the letter back to the landlord.
Step 15 – Signatures
Signatures and print names of the parties are the last things to be included in a letter of intent. They make the LOI valid.
There is no need to write down the letter of intent to rent commercial property from scratch. Use our printable template to fill in all the needed information. It will let you save valuable time.
To: Megan Rox
Texas Roxy Rentals
995 Whitemarsh Court
Copperas Cove, TX 76522
April 4, 2021
From: Sidney Lockford
8399 Garden Lane
Vidor, TX 77662
RE: Letter of intent to rent commercial property at the address 980 Coffee Drive Corpus Christi, TX 78413
Dear Mrs. Rox,
We are pleased to present the following proposal to lease the above-referenced property on behalf of Sidney Lockford.
1. Location and size of premises: 980 Coffee Drive Corpus Christi, TX 78413, consisting of approximately 1076 square feet of office space.
2. Use: A small-sized software development company focusing on building applications that automate business processes.
3. Tenant: Sidney Lockford.
4. Landlord: Megan Rox.
5: Lease term: 12 months, commencing April 10, 2021.
6. Rent provisions: $5000 (five thousand dollars) per month on a Modified-Gross basis.
7. Security deposit: $5000 (five thousand dollars).
8. Operating expenses: In addition to the Rent, the Tenant should pay some operating expenses, namely, the cost of cleaning services and common area maintenance on a month-to-month basis; the Landlord should pay real estate taxes and property and building maintenance on a month-to-month basis.
9. Early occupancy: the Tenant should receive immediate occupancy upon signing the lease.
10. Lease renewal: the Tenant has the right to renew the Lease a total of 1 (one) renewal period by giving the Landlord a written notice no less than 30 (thirty) days before the expiration of the Lease.
11. Parking: the Landlord should provide the Tenant with parking throughout the lease term (10 parking stalls for free).
12. Binding effect: This Letter of Intent states the major terms of the agreement that the Tenant would be prepared to move forward with. This Letter of Intent is in no way a legally binding agreement between the Tenant and the Landlord.
13. Acceptance: If you agree to the above-mentioned terms, please sign this Letter of Intent and return the duplicate copy within five (5) business days after the delivery.