Plain and simple: We, as partners in a real estate transaction, need to resolve as many issues as possible for your business, before the lease is drafted.
While we have encountered several competing brokerage firms using letters of intent / tenant proposals based on basic business terms such as rent, area, and escalations, we understand that dozens of other issues typically surface with the presentation of the landlord’s draft lease. From our point of view, this is the worst time for disagreements or misunderstandings to emerge. Your urgency to close the deal and get the relocation program underway can now pressure you to concede to unfavorable lease provisions.
A well-crafted letter of intent / tenant proposal can prevent this situation from occurring.
This type of proposal covers, in detail, the terms and conditions of the deal. It is delivered to the landlord, or landord’s leasing broker, to demonstrate intent to lease or purchase as well as for qualification and negotiation purposes, prior to the drafting of a lease.
What does this accomplish? Your legal fees are reduced, and your leverage is conserved.
Comprehensiveness is crucial and when we draft a proposal with the highest attention to detail, nothing is taken for granted. While listing broker’s tend to cast as little light on detail or imperfection, it is assumed that any issues omitted or inadequately addressed will ultimately be resolved in the landlord’s favor.
Among other questions that our tenant representation team has catered for industry specific needs, we find these proposal inquiries commonly omitted from letter of intent / tenant proposals, which should be clearly addressed in ours . . .
- What restrictions will be put on the use of the premises?
- Which of the landlord’s expenses will be included in calculating operating escalation, and which will be excluded?
- How will you be charged for electricity usage? If sub-metered, what is the landlord’s profit margin?
- What rights will you have to sublease the space? If there is a profit, which party will get the benefit?
- What rights will you have to renew the lease? How will the renewal rent be determined?
- What rights will you have if the landlord defaults on a mortgage or a ground lease?
- What rights will you have to make alterations to the space?
- What will your obligations be at the expiration of the lease?
- Which party will pay for working drawings?
- Which party will bear the cost of bringing the space into compliance regarding any Disabilities regulations?
- During what hours will the space be heated and air-conditioned?
- What penalties will accrue if the landlord does not deliver the space on time?
These are only some of the potentially deal-breaking or otherwise costly issues that the proposal should address. If they are resolved, final lease negotiations will be relatively swift and painless. If not, you preserve your options while looking elsewhere.