Commercial Leasing 2019-10-25T15:06:46-05:00

Commercial Leasing

Letter of Intent: The Precursor to the Lease

In the context of commercial leasing, a Letter of Intent (“LOI”) is the resulting document from a period of negotiations between a Landlord and Tenant. The LOI sets out the basic terms which must be transposed into a binding lease agreement.

These initial agreements are useful to both the Landlord and Tenant by memorializing the terms of the basic deal in writing, which can be binding or non-binding. Theses precursory agreements must be carefully drafted so as not to serve the wrong purpose.

Tenant Considerations

Landlords and Tenants should anticipate a long-term working relationship when negotiating lease terms and provisions.

RENT

The lease drafter must clearly distinguish the Minimum and/or Additional rental rates for the Tenant. If the Premises are part of a larger shopping center or retail unit, there will be additional monthly charges for taxes, insurance, and common area maintenance. If the parties agree to an abatement of rent during the initial months of Tenancy, the Rent Commencement Date should be clearly identified.

USE

This provision of a lease must be drafted to permit the Tenant to use the Premises for the current intended business purpose and any prospective future uses the Tenant may deem appropriate. Tenants should also consider any existing use restrictions or exclusivity for their intended use.

TERM

During the Term of the lease, the Tenant, not the Landlord, has the right to exclusive possession of the property. The Term often does not commence until improvements that Landlord agreed to make or permitted to be made to the Premises prior to Tenant’s possession are substantially complete. Tenants should also consider the availability of renewal options.

GET STARTED TODAY

Negotiations that are truly ‘win-win’ can result in a satisfying relationship for both Landlord and Tenant.

Email your LOI or lease to get started today.

Nikhil Vyas, Esq.

Nik@vyasrealtylaw.com

MAINTENANCE

Both Tenant’s and Landlord’s respective obligations for ongoing maintenance and repairs of the Premises during the lease term should account for the age of the building and HVAC unit.

TRANSFERS

Every commercial lease should address whether, and to what extent, the Tenant may transfer its rights in the Premises to some third party. Landlord’s prior approval is often a condition of the assignment.

INSURANCE

The policy limits stated in a standard lease are often requirements created by the lending institution that provides financing to the Landlord, and are generally non-negotiable.

Email Nikhil