Intending On Leasing Commercial Real Estate?

There can be considerable confusion in the minds of tenants and landlords who are

looking for some sort of advice that would help them out of potentially messy leases. One of the key reasons for misunderstandings arising in a lease transaction is a poorly worded or misunderstood lease agreement. The point is more pertinent when one looks at the smaller and less sophisticated tenant who may have signed a landlord's Standard Form Lease without properly having understood the implications of the terms of the document, since the Standard Form Lease is really more of a wish list of the landlord and heavily loaded in his favor.

The process of leasing commercial space begins with evaluating the needs of the tenant and continuing to look at the leasing process from the point of view of the tenant will be certain to provide continuity as well as save time, money and effort. This may require that each party have thorough knowledge and empathy for the main issues faced by the other and also means having a balanced perspective of the issues involved.

The letter of intent to lease commercial space is a compilation of the various considerations that a tenant may have and should reflect the customized needs of the tenant. Just like the Standard Form Lease represents the landlord's wish list, the letter of intent to lease commercial space is the tenant's own wish list. The letter of intent to lease commercial space should contain every tenant requirement and having a comprehensive list would ensure that the tenant has addressed all the important issues involved. It is no surprise that most major lease negotiations are based on the letter of intent to lease commercial space and even this document is not binding and so it is very difficult to change the terms contained and its importance is equally in favor of both parties.

Any changes that are to be made to the letter of intent to lease commercial space should be done so only after exercising adequate care since the effects of changes could have serious consequences. For example, the tenant's negotiating leverage may be greatly compromised if provisions such as options of extending or terminating, limiting liabilities, escalation and security deposit provisions are not adequately mentioned in the letter of intent.

Also, it acts in both parties' interest for them to spend added time in thrashing out the details of the letter of intent which should help minimize any chance of misunderstandings from arising later on and this would also mean saving on costly attorney's fees etc. To preserve that the letter of intent not be binding this document needs to not only offer but also impose no legal obligations for the purpose of continuing negotiations in order to reach an agreement.

This may mean that the parties are obliged to act in good faith and that in case no formal agreement is reached within a specified time frame, then either party may terminate the negotiations. In addition, for the letter of intent to lease commercial space to be enforceable it should include all the fundamental terms.

Remember that entering into a letter of intent to lease commercial space is a vital step for the parties to a commercial lease and given the length as well as complexity of the commercial lease document it needs to be repeated that the whole process would take some time to negotiate an agreement. This will necessitate that the letter of intent should include all the necessary terms of the intended deal to obviate the possibility of subsequent breakdowns in negotiations and secondly each party should know just how binding they want the letter of intent to lease commercial space to be.

The letter of intent to lease commercial space is a very important document for either party and should be carefully drafted. The right choice of document is necessary for a fruitful agreement and one solution that presents itself is to purchase a pre-defined letter of intent which is available on the market for low cost and which takes into account all the small print required and which is ready to use off the shelf and can also be tailored to suit individual requirements. For a few dollars one would be saving a lot of time, money and effort and also have a fully functional letter of intent.

by: Wade Anderson

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