Lease Letter of Intent

Lease Letter of Intent: Agree the Main Terms Before the Lease

A lease letter of intent records the main terms a landlord and tenant have agreed in principle for a new lease of commercial property: the premises, rent, term, deposit, break rights, repairs, incentives, permitted use and any conditions. It is not binding, apart from a few paragraphs such as confidentiality and exclusivity, and it gives the lawyers a clear brief for drafting the lease. Robot Lawyer drafts the letter from your answers, for the law of the country or state you choose, and on the Verified plan a qualified legal professional checks it within 24 hours before you send it.

CONTENTS

What Is a Lease Letter of Intent?

A lease letter of intent (often called a LOI, and in the UK similar to heads of terms) is a short letter from one party to the other setting out the commercial deal for a proposed lease. It is usually marked "Subject to contract" so neither side is bound to grant or take the lease until the formal lease is signed.

Agreeing the main terms first saves time and legal costs, reduces the risk of misunderstandings, and shows both sides are serious about the deal.

When Should You Use One?

• Taking new premises
  Offices, shops, warehouses, restaurants or industrial units.
• Negotiating with a landlord
  Confirm the offer you have made or accepted.
• Before instructing lawyers
  Give both sides' lawyers the agreed terms to work from.
• Rent-free periods and incentives
  Record incentives so they are not lost in drafting.
• Conditional deals
  Where the lease depends on planning, finance or works.

What's Included in Your Letter?

• The parties and the premises
  The landlord, the tenant and the property.
• Rent and payment
  The rent, how often it is paid, any service charge and VAT or sales tax.
• Term and start date
  How long the lease lasts and when it starts.
• Deposit and guarantee
  Any rent deposit or guarantor.
• Break rights and rent reviews
  When either side can end the lease early and when rent is reviewed.
• Repairs, use and alterations
  Who repairs what, the permitted use and any works.
• Incentives and conditions
  Rent-free periods, contributions and conditions the deal depends on.
• Binding and non-binding terms
  Which paragraphs are binding, such as confidentiality, exclusivity and costs.

What Your Document Looks Like

Your letter is set out on two or three pages: the date and parties, a "Subject to contract" heading, a short introduction, a numbered list of the proposed lease terms, a section on the binding paragraphs, and a section for the other party to countersign that the terms are agreed in principle. Here is an extract from a sample letter we generated:

Non-binding status. Except for paragraphs 16, 18 and 19, this letter and the proposed terms are not legally binding and are subject to contract and to a formal lease being agreed and signed. Neither party is bound to take or grant the lease until it is completed. Either party may withdraw before then without liability, except for its obligations under the binding paragraphs.

How It Works on Robot Lawyer

1. Answer the questions
   Tell us about the property, the parties and the terms you have agreed.
2. Generate your letter
   We draft a clear letter of intent from your answers.
3. Get it verified
   On the Verified plan, a qualified legal professional checks your letter within 24 hours and makes amendments where needed. The Essentials plan does not include this check. See how our documents are verified.
4. Send it to the other party
   Download it and send it for countersignature.

How It Works in Different Countries

• England and Wales
  Business tenants usually have a right to renew under the Landlord and Tenant Act 1954 unless the lease is "contracted out" by a formal notice procedure before it is signed. Leases over seven years must be registered at HM Land Registry, and Stamp Duty Land Tax may be due.
• United States
  Letters of intent are common in commercial leasing. Whether any terms are binding depends on the wording and state law, so the non-binding language matters.

These notes are general. Check the current rules where the property is.

Lease Letter of Intent FAQs

Is a letter of intent legally binding?

The main lease terms are not binding until the lease is signed. Your letter makes only the confidentiality, exclusivity, costs and governing law paragraphs binding.

Who usually sends the letter?

Either side can, but often the tenant or its agent sends it to confirm an offer, or the landlord's agent sends it after terms are agreed.

Can we change the terms later?

Yes. The terms can still be negotiated, and the final lease will set out the binding terms.

What happens after the letter is signed?

The landlord's lawyer usually prepares the draft lease using the terms in the letter.

Can I use this letter outside the UK?

Yes. Your letter is drafted under the law of the country or state you choose. Our lawyers are qualified in England and Wales and, on the Verified plan, check documents for good practice, clear formatting and the law of England and Wales. They are not qualified in other countries' law, so if your letter is governed by another country's law, we recommend having a local lawyer check it too.

Create a Lease Letter of Intent

Agree the main terms of your lease clearly before the lawyers start. You can start with a 7-day free trial. See our pricing for the plans. Related documents: Lease Agreement, Lease Guarantee, Lease Option Agreement and Lease Assignment Agreement.