Commercial Lease Letter of Intent Template

Commercial leases often run dozens of pages and can tie a business to one space for years. Before any of that paperwork appears, the landlord and tenant need to agree on the deal itself – and the short document that captures it shapes almost everything that follows.

What a Letter of Intent Does

A commercial lease letter of intent, often called an LOI, is a brief outline of the deal a landlord and tenant have tentatively reached. It usually runs just a few pages and covers the big-ticket items: rent, lease length, the space, build-out money, and any options the tenant wants.

The LOI does three jobs. It forces both sides to put real numbers on paper instead of talking in general terms. It gives whoever drafts the lease a clear framework to work from. And it settles the most expensive questions early, while the document is short and changes are cheap to make.

Either side can write it. In practice, a broker often prepares the first draft – a tenant's broker after the tenant picks a space, or the landlord's leasing agent when the owner wants to set the terms. Both sides then trade edits until they agree and sign.

Is a Letter of Intent Legally Binding?

Generally, no. Most LOIs state that they don't create a lease, and without a signed lease either party can usually walk away. Courts tend to treat an LOI as a road map for negotiations rather than a finished contract.

Wording can change that. If a letter includes every key term, uses firm language like "the parties agree," and never says it's non-binding, a court may treat it as an enforceable deal. How courts read these letters also varies by state, so the language deserves close attention.

Even a non-binding LOI often contains a few clauses meant to bind. Common examples are confidentiality, which keeps the terms private, and exclusivity, which stops the landlord from shopping the space to other tenants for a set time. Deposit and site access terms may also bind. A well-drafted LOI states plainly which sections bind and which don't.

What to Include in the LOI

Every deal is different, but most commercial lease LOIs cover the same core terms:

• The parties – the landlord, the tenant, and any guarantor, named correctly.
• The premises – the address, suite, and square footage, noting whether the figure is rentable or usable space.
• Lease term and start date – how long the lease runs and what must happen before it begins.
• Base rent and increases – the rate, the payment schedule, and how rent rises each year.
• Lease type – gross, modified gross, or triple net, and who pays taxes, insurance, and common-area costs.
• Permitted use – the business activities allowed in the space.
• Tenant improvements – the build-out allowance, who manages the work, and the condition of the space at move-in.
• Concessions and options – free rent, renewal, expansion, or early termination rights.
• Security deposit – the amount and any schedule for reducing it over time.
• Contingencies and deadlines – permits, financing, or approvals the deal depends on, plus a date when the offer expires.

Detailed legal language – default and cure periods, insurance limits, repair duties, assignment rules, and notice clauses – usually belongs in the lease itself. The LOI focuses on money and structure. The lease handles the legal fine print.

Why the Numbers Matter More Than You Might Think

Many tenants treat the LOI as a rough first draft and plan to push back when the lease arrives. That approach often backfires. Once a rent figure appears in a signed LOI, the lease is typically drafted at that number, and the other side sees any attempt to reopen it as backtracking.

A small detail can add up, too. A one-percent difference in yearly rent increases compounds over a long term, and the gap between rentable and usable square footage affects what a tenant actually pays per foot. For this reason, it's generally wise to negotiate the business terms fully at the LOI stage.

How to Fill Out the Template

ConsumerShield's letter of intent template walks you through each section so nothing important gets missed. A simple approach looks like this:

• Enter the full legal names of the landlord, the tenant, and any guarantor.
• Describe the space precisely, including square footage and how it was measured.
• Fill in the rent, increases, lease type, and term, using exact numbers rather than ranges.
• List every contingency, such as permits or financing, and set an expiration date for the offer.
• Mark which clauses are binding and which are not.

Before signing, it may be a good idea to confirm the space fits your planned use. A business location must follow local zoning requirements, and parking, capacity, or HVAC limits can also affect whether the space works for you.

What Happens After Both Sides Sign

A signed LOI starts the lease drafting stage. The drafting party turns the agreed terms into a full lease, while the tenant and landlord often complete due diligence, such as reviewing financial statements, inspecting the space, or checking permits.

Some details may still shift as the lease takes shape. If no lease is signed, neither side is usually obligated to go forward unless the LOI says otherwise. If terms change after the lease is signed, the parties typically record the update in a written amendment.

A clear LOI keeps the lease on track and helps both sides avoid surprises. If you're buying a business, a property, or equipment instead of renting space, ConsumerShield offers letter of intent templates for other kinds of deals too.