Commercial lease letter of intent template

Commercial lease letter of intent

[Letter date]

To: [Landlord legal name], [Landlord address] (the “Landlord”)

From: [Tenant legal name], [Tenant address] (the “Tenant”)

Re: Proposed lease of [Premises address and unit] (the “Premises”)

This letter of intent (the “Letter”) sets out the main terms on which the Tenant proposes to lease the Premises. Except for the sections listed in section 20 as binding, this Letter is not binding on either party and does not create a lease or an obligation to enter into one.

1. Premises

Approximately [Rentable area] rentable square feet, being [Unit or floor] in the building at [Address] (the “Building”), as shown on the plan in Schedule A. The final area will be measured by the Landlord's architect under [BOMA standard and year], and rent will be adjusted to the measured area.

2. Permitted use

[General office / retail sale of Description / light industrial and warehouse] and related lawful uses, subject to zoning.

3. Term

[Term] years, starting on [Commencement date] (the “Commencement Date”).

4. Base rent

Base rent of [Base rent per square foot per year] [Currency] per rentable square foot per year for years 1 to [Number], increasing to [Amount] for years [Number] to [Number], payable monthly in advance, plus applicable sales taxes such as GST/HST.

5. Additional rent

The lease will be [net / semi-gross / gross]. The Tenant will pay its proportionate share of operating costs, realty taxes and [utilities], estimated for [Year] at [Amount] per rentable square foot per year. Operating costs will exclude capital costs except as amortized under the lease, the Landlord's financing costs, and costs of other tenants' improvements. [Controllable operating costs will not increase by more than Percentage percent per year.]

6. Fixturing period and free rent

The Tenant will have [Number] days of rent-free possession before the Commencement Date to install fixtures, during which it will pay [no rent / utilities only]. The Tenant will also receive [Number] months of free base rent starting on the Commencement Date.

7. Landlord's work and tenant improvements

Landlord's work: before delivery the Landlord will, at its cost, [deliver the Premises in base building condition with HVAC, electrical and washrooms in good working order and compliant with code].

Tenant improvement allowance: the Landlord will contribute [Tenant improvement allowance] [Currency] per rentable square foot toward the Tenant's improvements, paid against invoices and lien waivers or statutory declarations as required by applicable construction lien law.

Tenant's work will be done under plans approved by the Landlord, acting reasonably, by licensed contractors.

8. Deposit

On signing the lease, the Tenant will pay [first and last month's rent / a security deposit of Amount], to be held under the lease terms. [A letter of credit may be provided instead.]

9. Renewal option

[Number] option(s) to renew for [Number] years each, on written notice at least [Number] months before expiry, at the then fair market rent determined by agreement or, failing agreement, by arbitration.

10. Assignment and subletting

Permitted with the Landlord's consent, not to be unreasonably withheld. The Tenant may assign or sublet to an affiliate, or in connection with a merger or sale of its business, without consent but with notice.

11. Signage

The Tenant may install [fascia, pylon and directory] signage at its cost, subject to Landlord approval of design, acting reasonably, and municipal permits.

12. Parking

[Number] parking spaces at [Amount per month / no charge], [reserved / unreserved].

13. Exclusivity and restrictions

[The Landlord will not lease space in the Building to another tenant whose primary use is Description, subject to existing leases.] [Not applicable.]

14. Hours and access

The Tenant will have access to the Premises 24 hours a day, 7 days a week, subject to building security procedures.

15. Environmental

The Landlord will confirm the condition of the Premises in a recent environmental report and remain responsible for contamination existing before the Tenant's possession. The Tenant will be responsible for contamination it causes.

16. Conditions

This deal is subject to: (a) the Tenant's satisfactory inspection and due diligence by [Date]; (b) approval by the Tenant's [board or lender] by [Date]; (c) approval by the Landlord's lender if required; and (d) the parties signing a lease acceptable to each of them, acting reasonably, by [Date].

17. Lease form

The Landlord will provide its standard lease form, modified to reflect this Letter, within [Number] business days after this Letter is signed.

18. Brokers

The Landlord is represented by [Landlord broker] and the Tenant by [Tenant broker]. The Landlord will pay commissions under its separate agreement. Each party confirms it has dealt with no other broker.

19. Guarantee

[The Tenant's obligations will be guaranteed by Guarantor name.] [No guarantee is required.]

20. Binding provisions

Only the following sections of this Letter are binding: section 20 (this section), section 21 (Confidentiality and exclusivity), and the closing sections that follow it on governing law, notices, entire agreement and electronic signatures, which apply only to these binding provisions. All other terms are non-binding and are subject to a signed lease. Either party may stop negotiating at any time for any reason without liability, other than for breach of the binding provisions.

Each party will pay its own costs, including legal costs, of negotiating this Letter and the lease, [except that the Tenant will pay the Landlord's reasonable legal costs of preparing the lease up to Amount].

21. Confidentiality and exclusivity

The parties will keep the terms of this Letter confidential, except to their advisors, lenders and prospective investors who need to know them.

For [Number] days after this Letter is signed, the Landlord will not offer the Premises to, or negotiate a lease of them with, anyone else.

22. Acceptance

If these terms are acceptable, please sign and return this Letter by [Acceptance deadline]. If it is not signed by both parties by then, it will lapse.

23. Governing law and disputes

This Letter is governed by the laws of [Province or state] and the federal laws of [Country] that apply there, without regard to conflict-of-laws rules that would apply the law of another place.

If a dispute arises, the parties will first try in good faith to resolve it by discussion between people with authority to settle it, for at least 30 days after one of them gives written notice describing the dispute. If the dispute is not resolved in that time, either of them may start proceedings in the courts located in [City, Province or state], and each submits to the non-exclusive jurisdiction of those courts.

Nothing in this section prevents anyone from seeking urgent injunctive or other interim relief from any court with jurisdiction to protect confidential information, intellectual property or property, or to prevent irreparable harm.

24. Notices

Any notice under this Letter must be in writing and delivered by hand, by courier, by registered mail, or by email to the address shown in the signature block or another address given by notice.

A notice is received: when delivered, if delivered by hand or courier on a business day before 5:00 PM local time at the place of receipt, and otherwise on the next business day; on the fifth business day after mailing, if sent by registered mail; and when sent, if sent by email before 5:00 PM local time of the recipient on a business day with no automated message that it was not delivered, and otherwise on the next business day.

Routine operational communications may be sent by any reasonable means, but a notice of breach, termination or a claim must also be sent by a method listed above.

25. Entire agreement and general terms

Entire agreement. This Letter, including any schedules and documents it expressly refers to, is the entire agreement about its subject matter and replaces all earlier discussions, proposals and agreements about that subject matter, whether written or oral.

Amendments and waivers. A change to this Letter is effective only if it is in writing and signed by each party. A failure or delay in enforcing a right is not a waiver of it, and a waiver of one breach is not a waiver of any other breach.

Assignment. No party may assign this Letter without the prior written consent of the others, which will not be unreasonably withheld, except that an organization may assign it without consent to a successor to all or substantially all of its relevant business or assets by giving written notice. This Letter binds and benefits the parties and their permitted successors and assigns.

Severability. If any provision is found invalid or unenforceable, it will be limited or removed to the minimum extent necessary, and the rest of this Letter stays in full force.

Interpretation. Headings are for convenience only. The words “including” and “includes” mean “including without limitation”. Amounts are in [Currency] unless stated otherwise. A reference to a law includes any amendment or replacement of it.

Language. The parties have expressly required that this Letter and all related documents be drawn up in English. Les parties ont expressément exigé que la présente entente et tous les documents connexes soient rédigés en anglais.

26. Counterparts and electronic signatures

This Letter may be signed in any number of counterparts, each of which is an original and all of which together form one document.

The parties agree that this Letter may be signed and delivered electronically, including through an electronic signature service such as eSora Sign. An electronic signature, and a signed copy delivered by email or as a PDF, has the same legal effect as a handwritten signature on a paper original, to the extent permitted by applicable law, including the U.S. Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA) as adopted in the relevant state, Part 2 of the Personal Information Protection and Electronic Documents Act (PIPEDA), and provincial electronic commerce legislation in Canada.

Each party consents to receive this Letter and related notices electronically, and agrees that the electronic record of the signing process, including any certificate of completion and audit trail, may be used as evidence that this Letter was signed and of when it was signed.

Signatures

By signing below, each party confirms that this Letter accurately records the proposed terms and that only the sections listed in section 20 are binding.

TENANT

Organization: [Legal name of organization]

Name: ______________________________

Title: ______________________________

Signature: ______________________________

Date: ______________________________

Email for notices: ______________________________

LANDLORD