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  • Feb 21, 2010
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Letter of Intent information

Generally, a lease negotiation starts with putting the major negotiable terms down on paper in the form of a “Letter of Intent”, or LOI. Most commercial leases are multiple pages (15 – 50), so first starting with the major terms helps move the process along. Every lease has its own unique points, so your broker needs to understand your business and its key success factors to make this a win-win for all parties. This is a sample and this can vary due to type of lease, type of use, or location or facility. This is a summary from what I have seen in the Tri-Valley East Bay (Pleasanton, San Ramon, Dublin & Livermore).

Letter of Intent Elements

 

Sample of Major Points or Clauses in the Lease Negotiation

 

  • Opening Paragraph
    • Identifies:
      • Tenant
      • Landlord
      • Premise address
  • Description of the Premises
    • Suite number
    • Floor
    • Approximate square footage
      • Usable
      • Rentable (includes load factor of the building)
  • Proposed Lease Term & Commencement Date
  • Proposed Rent schedule
  • Tenant Improvements
    • Identify what the Landlord will provide
    • Identify what the Tenant wants to do with the space
  • Proposed Use
    • Appropriate zoning for building?
    • Conditional Use Permit required (CUP)
  • Security Deposit
  • Renewal Options
  • Credit terms
    • 2 years of financial statements
    • Tax Returns
    • Business Plan
    • Credit check
  • Expansion Options
  • Binding Clauses
  • Understanding that LOI is non-binding agreement
    • Space not removed from market until binding agreement executed

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