How To Get a Good Lease Step 5/10

You’ve reached the point in your negotiation where you agreed with the landlord on the business points. They will ask you for the executed LOI.

This is an exciting moment but before you sign, take a beat to do one last review with a fine-tooth comb. The devil is in the details.

Step 5. Executing the Letter of Intent (LOI)

The Letter of Intent (LOI) Execution is big moment in your leasing journey. It means the landlord and tenant have agreement on the business terms.

The execution means the document is signed by the tenant and sometimes by the landlord. It is not legally binding, but it signifies that both parties will honor the terms of the LOI and pursue a negotiated and signed lease in ‘good faith.’ This is often the point when big corporations and landlords have an advisor review the deal for internal approval.

The signed LOI then becomes a reference document to draft the lease agreement. Save it somewhere safe.

Drafting the initial lease often takes a couple weeks between the attorneys and corrections. During that time, the attorneys are interrupting the LOI terms into the landlord’s lease form document.

Upon LOI execution, you need to get a real estate attorney. There is some typically engagement paperwork and you’ll want to give them direction on the level and tenacity of the review you want from them.

It’s common for some key LOI terms to get lost in the shuffle.

So always, always, always review the lease for the LOI terms. Hopefully your broker will also help with this task. However, this does not excuse you from also reviewing the document to ensure it matches your understanding of the deal.

From this point forward, you’ll hear issues in the lease referred to as ‘business decisions’ or ‘legal.’ A business decision means that it’s your ‘call’ as the business owner. Some attorneys cross this line and give business advice and others won’t be as helpful. If something is confusing because it’s poorly written or garbled up in legalese, I will ask the attorney:

“Would you give me an example of how this may play out?”

This helps the attorney put the language into common experience that you will hopefully be able to relate to.

Ultimately, every decision is a business decision

Once you sign the lease, everyone but your landlord will bid you farewell. And it gets very, very real.

Thank you for hanging with me until now.

How’s is all this landing? Has this been helpful? Are there any questions you have that you think I may have missed?

I’d love to clarify any questions before we head into…

Step 6 The Lease Negotiation.

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