The lease is LEGALLY BINDING (think marriage), and while it is important to make sure that the main terms of the LOI are reflected in the lease, it is equally as important to hire an attorney to protect you from a legal standpoint (think pre-nuptial agreement).
LOI (Letter of Intent) vs. Lease
By David Simmonds – Founder & President, RESOLUT RE
The site selection search is an awful lot like dating. First, you’re looking around, trying to get more of a feel for what’s out there. Then the casual meetups start (think showings). From there comes the sizing-up phase (think LOI aka Letter of Intent)…a phase during which the two parties (landlord and tenant/buyer and seller) start laying out the terms and conditions on which the relationship would be structured. Some are deal breakers, and some can be negotiated. The critical thing to remember is that the LOI process should be NON-LEGALLY binding and needs language within that says as much.
The lease is LEGALLY BINDING (think marriage), and while it is important to make sure that the main terms of the LOI are reflected in the lease, it is equally as important to hire an attorney to protect you from a legal standpoint (think pre-nuptial agreement). And if things go wrong during the relationship, and the issues aren’t getting resolved, both sides will use the lease to justify their side of the story.
Don’t get bogged down with the nitty-gritty during the LOI process. It serves as a basic outline of the economics the owner and prospect agree to, leaving the finer points to your attorney.
And ALWAYS have the LOI signed by both parties. While the agreement is non-binding, the signatures memorialize what was agreed to going into the lease phase. Memories can become inconsistent sometimes.
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About The Author: DAVID SIMMONDS
David Simmonds founded RESOLUT RE in January 2009 and has built a massive, international, 3rd-party brokerage platform. RESOLUTE RE has six offices across Texas (Dallas/Fort Worth, Houston, Austin/San Antonio, McAllen, Midland & El Paso) and serves the great states of Louisiana and New Mexico out of offices in Lafayette, Albuquerque, and Santa Fe.
RESOLUT RE represents 68 tenants nationally/internationally. We can service our clients’ expansion needs anywhere in the United States and up to 130 countries around the globe.
RESOLUTE RE markets over 800 projects and exclusively represents over 250 tenants regionally across Texas, New Mexico, and Louisiana.
David is a member of the International Franchise Association (IFA) and the International Council of Shopping Centers (ICSC) and received a Bachelor of Arts degree in Economics from Columbia College/Columbia University in New York City.