What’s a Letter of Intent (LOI)?
A letter of intent is a formal step towards leasing or purchasing a commercial property. It’s a non-binding document that’s not enforceable by the court of law. However, it’s an important document between the property owner and the prospective tenant. It contains the statement of intent on behalf of a prospective tenant indicating his seriousness in leasing the commercial property identified in the document.
For all these reasons, it is important to draft a letter of intent to lease commercial property carefully.
The letter of intent to lease commercial property acts as a formal show of interest in a property. This is expected to begin a process of negotiations in which the finer details will be finalized. These details will be included in the rent agreement entered into by the property owner and the tenant.
In this post, we will discuss how to write a letter of intent to lease commercial property.
When Should a Letter of Intent Be Written?
A guide on how to write a letter of intent to lease commercial property must also include when to write this letter.
You should write a letter of intent only when you are sure about leasing the commercial property in question. Before writing this letter, you must have visited the particular property and checked out important details about it. In most cases, a preliminary negotiation around the topics such as renovations, upgrades, rent, security deposits is completed before writing the letter of intent.
However, before you zero in on a particular commercial property, you must have checked out all other alternatives that are available in the market. This means you must have done extensive research about available properties that meet your selection parameters. Anyway, these steps are important before you pen down the letter of intent to lease commercial property.
Who should write it?
Depending on how small, big, or complex the property is, either you or your real estate agent can write the letter of intent. For example, if it requires a plain letter with some basic details, you can perhaps write the letter of intent yourself.
But if the letter of intent to lease commercial property is about a complex commercial property, your real estate agent can be a better choice. He may be better informed about things to be particularly careful about at this stage.
Get Important Details in Writing
A letter of intent is also necessary to ensure that important details such as the measurements, rent, and other specifications in a written record in the early stages of entering into a contract. In a chaotic and busy business environment, it’s possible to forget a few details.
To save yourself from such problems, it’s recommended that you enter the basic details of the commercial lease in a formal document such as the letter of intent to lease commercial property.
Above all, a letter of intent on your part lets the property owner know that you are serious about the proposal. It forms the basis on which the property owner and the prospective tenant get into negotiations leading to the signing of a legal contract where all the finer details are included.
Letter of Intent from the Property Owner
A letter of intent outlines the time for which it is valid. If the property owner agrees to lease the property to the person or company, he will also write a letter of intent to the prospective tenant. Once these two letters of agreement are accepted by the respective parties, the property is by and large ready to be leased and no new parties will be entertained by the property owner.
In the case of commercial properties, the actual takeover by the tenant may take a few weeks or months. This is because the property might need some upgrade or renovation. Signed letters of intent by both parties ensure that both are committed to the agreed set of terms and conditions even during the intervening period before the legal contract is signed.
Tips on How to Write a Letter of Intent to Lease Commercial Property
A letter of intent to lease commercial property is a business letter that needs to be written in a manner that is formal and high on clarity.
The letter of intent for commercial lease of a property should start with an introduction to your business or company. This should be followed by a description of your need for a commercial space. After this, you can identify the property you want to lease by indicating how it serves your purpose.
Finally, you can give a time extending 15 to 30 days or as the case may be for the landlord to respond to your proposal. You should close the letter on a formal note by signing it.
These are some important tips on how to write a letter of intent to lease commercial property.
Things to be Careful About
- Mention the names and addresses of both the landlord and the tenant
- Identify the commercial property under discussion for the lease
- Mention the measurements and other significant details of the property
- Mention the part of property expenses to be borne by the tenant and the landlord
- Mention who will pay for the signage and court fee for the rent agreement
- Mention the provision for parking and who will pay the parking fee, if any
- Mention whether the tenant will have any right to sublease the property
- In the case of a sublease, the manner in which the income will be shared between the tenant and the landlord
- Any part of the property such as the terrace that the tenant can use for free or at abated rent
How to Write a Letter of Intent to Lease Commercial Property?
Format
To
Name of the landlord:
Address:
From
Name of the Tenant:
Address:
Contact Details:
Dear Mr./Ms. ……….
Introduce Your Business or Company
The University of Americana is one of the most renowned education companies in the USA. We run a number of colleges in different cities across the US. Now, we plan to open a campus in Raleigh, North Carolina.
Spell Out Your Requirement
To that end, we are looking to lease a commercial building with at least 200,000 sq ft. We are looking at options where there is an open space as part of the property.
How You Want to Use It?
We intend to run a few professional academic programs including MBA, fashion design, interior design, and hotel management. We plan to have about 2000 students and 200 staff members at this campus.
Letter of Intent
Our initial research and negotiations favor the Peepaltree Mall on Glenwood Avenue for this purpose. Our research reveals that the mall has 200,000 sq ft of space spanning the ground and first floor. We are informed that the space is available at a monthly rent of $15 per sq ft.
We write this letter of intent to lease commercial property, inviting you to initiate a negotiation process to finalize the details and sign a legal contract as early as possible. We would like to inform you that we are keen on taking this commercial property on lease for the above-mentioned project. We want to lease the property for 10 years from the date the contract is signed.
This letter of intent is valid for 30 days, starting today, 10 May 2021.
We hope you find sufficient merit in our proposal to take it forward.
Best Regards
Signature:
Mr./Ms. …………
Designation:
Name of company:
Address:
Sample 1
To
Real Estate Manager
Peepaltree Mall
4325 Glenwood
Raleigh, NC
From
Best Barista Inc.
311 Fayetteville Street
Wake County, NC
Contact details: XXX XXX XXXX
Dear Mr. XYZ,
We introduce ourselves as a fast-growing coffee shop brand. Right now, we have 1000+ coffee shops in over 100 cities. We are interested in opening a coffee shop in Peepaltree Mall at Glenwood. For this, we need about 1000 sq ft of space in the food court on the ground floor of the mall.
Our real estate agent who has been in touch with you in this regard has informed us that the mall’s Shop No. 211 measuring 1000 sq ft is vacant. He has also informed that the shop can be leased at $5 per sq ft a month.
Through this letter of intent, we want to inform you that Best Barista is interested in leasing this shop. If you are interested in leasing the property to us, kindly write back to us latest by 30 June 2021.
Best regards
Signature: ………….
Sophia George
Manager – New Projects
Best Barista
Sample 2
To
Real Estate Manager
Triangle Industrial Park
Wegmans, Midtown
Raleigh, NC
From
Creative Garments
1121 The Northside Center
Wake County, NC
Contact details: XXX XXX XXXX
Dear Mr./Ms. XYZ,
Creative Garments is a leading manufacturer and exporter of fabrics and fashion garments. We are on the lookout for a 10,000 sq meter area in an industrial zone to set up a production unit. We are planning to deploy about 500 workers and run 3 shifts of 8 hours each.
After research and site visits, our real estate agent has advised in favor of Triangle Industrial Park. He has also informed us that there is enough space available here and the rentals are below$10 per sq meter.
We write this letter of Intent to inform you that we are interested in leasing the required amount of commercial space at your industrial park. If interested, kindly revert within 30 days or latest by 30 June 2021.
Best regards,
Signature:
Elizabeth Glenwork
Senior Manager
Real Estate & New Projects
Creative Garments
Sample 3
To
Real Estate Manager
Triangle Industrial City
Wegmans, Midtown
Raleigh, NC
From
SPG Superstore
Wegmans, Midtown
Raleigh, NC
Contact details: XXX XXX XXXX
Dear Mr./Ms. ………………..
We are pleased to inform you that we plan to open a branch of SPG Superstore in your upcoming Triangle Industrial City. As you may already know we are a popular brand of daily needs store.
For this project, we need about 100,000 sq ft of space. We need ample parking space and at least two elevators as part of the commercial space.
We write this letter of intent to lease commercial property to begin the negotiation and finalize the details including the rent. Can I request you to ask your sales team to get in touch with us latest by 30 June 2021 to take this proposal forward?
Looking forward to hearing from you soon!
Best regards,
Signature:
Victoria Elizabeth
Vice-President
Expansion and New Markets
Sample 4
To
Real Estate Manager
Freedom Shopping Mall
Wegmans, Midtown
Raleigh, NC
From
Habel Francis
311 Platinum Heights
Wegmans, Midtown
Raleigh, NC
Contact details: XXX XXX XXXX
Dear Mr./Ms. …………………….
I am 50-year old retired US Army personnel who live conveniently close to your shopping mall. I am planning to open a small office from where I can run a business of security consultancy services.
Through this Letter of Intent, I request you to find me an office space ranging from 250 to 400 sq ft at the Freedom shopping mall. My budget for the lease of the commercial space is $2500 per month.
I need a parking slot for an SUV as part of the leased property. I will greatly appreciate it if you could reply within a week, that is by 15 June 2021.
Thank you!
Yours Sincerely
Signature:
Habel Francis
Sample 5
To
Real Estate Manager
Freedom Shopping Mall
Wegmans, Midtown
Raleigh, NC
From
Elis Vermont
311 Platinum Heights
Wegmans, Midtown
Raleigh, NC
Contact details: XXX XXX XXXX
Dear Mr./Ms. ……..
I am a 50-year old self-employed woman. I run a few small businesses including one of fashionable sunglasses. We are a team of 5 designers who prepare these fashion sunglasses. These are premium products that sell for a minimum of $1000 apiece.
We would like to open an outlet for our sunglasses at your shopping mall. For this, we need a commercial space measuring 500-600 sq ft. Our real estate agent has figured out that Shop No. AP-211 meets our specifications. He has also informed me that this shop is currently vacant and under renovation.
Through this letter of intent, we would like to inform you that we want to lease Shop No AP-211 beginning next month, 1 June 2021. Can we request you to begin the leasing process by writing back to us latest by 25 May 2021?
Our budget for leasing this shop is between $2000 and $3000, depending on what you include in the lease.
Looking forward to hearing from you soon!
Yours Sincerely
Signature:
Elis Vermont …………………
