Originally published in the Colorado Real Estate Journal - February 20, 2013 – March 5, 2013.
Too often, prospective landlords and tenants give scant attention to the letter of intent stage of their negotiations. The landlord’s satisfaction at having found a creditworthy tenant, whose intended use is in line with the character of the property, and the tenant’s excitement in finding a great location at the right price, often leads both parties and their brokers to create a brief LOI without much consideration in order to capture their understanding in writing. The LOI, which should always be nonbinding, will serve as the basis for preparing the lease. Therefore, the parties should spend a meaningful amount of time considering what to cover in the LOI and how to cover it. This article provides a brief overview of 10 lease matters landlords, tenants and their brokers should consider including in the LOI.
A description of the premises is the most basic lease term and should be described as accurately as possible in the LOI. Also, the LOI should include any common or other ancillary areas such as parking and property amenities that the tenant will be able to use. Consider illustrating the premises on a floor plan or site plan that is attached to the LOI.
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