A tight LOI decides the deal. Here's every term to include - with sample language and negotiation levers.
A Letter of Intent (LOI) is the non-binding term sheet exchanged before a commercial lease is drafted. It memorializes economic terms, sets expectations, and gives both attorneys a clear scope to draft against. A well-written LOI can cut lease negotiation time in half and preserve leverage on the terms that matter most. This guide covers every deal point to include, sample clauses, and the difference between binding and non-binding LOI language.
Once an LOI is countersigned, 80% of the eventual lease has been decided in principle. Attorneys will draft to it. Every term you 'left for the lease' will be treated as an open concession the landlord's counsel will resist.
Front-load the LOI with the tenant-favorable terms you want in the lease - cotenancy, exclusivity, assignment, options, kick-outs, TI, free rent, caps. It is dramatically easier to hold ground during LOI negotiation than during lease redlines.
The LOI itself should be labeled 'non-binding' except for two carve-outs: (1) confidentiality of the terms exchanged, and (2) an exclusive negotiation period during which the landlord will not shop the space or entertain competing LOIs. Everything else remains subject to a mutually acceptable lease.
Sample non-binding language: 'This Letter of Intent is not intended to be a binding agreement between the parties. No binding obligations shall arise between the parties until a definitive lease agreement is fully executed, except for the confidentiality and exclusivity provisions in Section X, which shall be binding upon countersignature.'
Daniel Weber offers free, no-obligation strategy conversations for tenants, landlords, and investors across Southlake and DFW.