Finding commercial property for your business can be a multi-step process. You need to find a location that will best serve your business, make sure the site is up to environmental standards, draw up a contract, and more. This can be a long and arduous process. Creating a letter of intent can be an efficient and nonbinding way to confirm with your lender the potential terms of your lease before undertaking the whole contract process. Here are a few thoughts from an expert on the usefulness of LOIs:
- What is an “LOI” or letter of intent? An LOI is a document used in negotiations for the purchase or sale of a piece of commercial real estate. The purpose of an LOI is to set forth the basic business terms of the sale that both parties have discussed and agreed upon before drafting the contract. In most cases, LOIs expressly state that the terms of the LOI are understood by both parties to be not binding.
- Should a leaser and renter of commercial property create a letter of intent? It may be in the best interest of both parties to utilize a letter of intent. Because the letter is a record of the essential business terms of the commercial property sale that have been mutually agreed upon, the LOI allows both parties to expeditiously conform in writing their thoughts on the contract and the sale.