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What is the purpose of the Letter Of Intent?
A Letter Of Intent is a document that forms the basis of the final lease deed between the tenant and the landlord. In other words, the Letter Of Intent outlines the broad contours of the lease agreement that is eventually signed by the landlord and the tenant. If you are taking a space in a building on rent to start your business, the landlord may ask you for a Letter Of Intent from you which will give him an idea of your seriousness to rent the space and also what will be your exact requirements.
Although you can ask your broker to prepare the Letter Of Intent, it is good to know what goes inside a Letter Of Intent.
What does a Letter Of Intent contain?
- A statement from your side stating your intent to lease space inside the building.
- A brief description of your business including the business model, different business activities and a small history about the start date.
- A brief description about your products and services including the prices and packaging.
- A brief description of the markets where you sell your products or deliver your services.
- The number of employees that you will station in the building and any near-term hiring plan.
- The equipment and machinery that you will keep and use in the rented space.
- Your business hours and any plans to change it in the near future.
- If you have any branches, it will be good to include pictures of those in the Letter Of Intent.
- Your contact details and the best possible place for further meetings.
You can ask the landlord if he has a Letter Of Intent template and you can just fill out the details. You can also ask for a Letter Of Intent given by the other tenants to the landlord and get an idea as to how you should write one.
How to draft a letter of intent to lease commercial property
Letter Of Intent sample format
Dear Mr XYZ,
Our company PQR Ltd will like to submit this Letter Of Intent to communicate out interest in leasing space in your mall.
We are conducting our business with the brand name ‘STU’ which is the number one brand for pizzas. We have been in the business of serving pizzas since 2010. We have a number of varieties of pizzas and wraps. We also sell shakes and other beverages.
As of now, our pizzas sell in the price range of Rs 100-300 and beverages in the price range of Rs 50-200. Our customers are usually youngsters who can have the pizza at the outlet itself or get it packed to eat at home or office.
The outlet that we plan to open in your mall will be about 30 feet by 20 feet which will include the kitchen area and a few tables and chairs for the customers to sit and eat. Our equipment will include an oven and a gas-operated stove. We will also keep a small fridge and a medium-sized freezer.
The outlet will be manned by 7 employees including the ones in the kitchen and the reception. The outlet opening time will be 10 and the closing time will be 11 pm on all days including Sundays.
We hope to be able to complete all the leasing formalities and set up our outlet in your mall at the earliest. In case you find this Letter Of Intent in order, please feel free to contact us on 011-1111111 from Monday to Friday between 10 and 5 pm. We can also set up a meeting in your mall at a desired date and time.
Mr HP Singh,
Director- STU Pizzas
FAQs on writing a Letter Of Intent
What is a Letter Of Intent?
A Letter Of Intent outlines the intention of a party to enter into an agreement with another. Generally, a Letter Of Intent is not legally enforceable.
What is included in a Letter Of Intent?
A Letter of Intent for a commercial lease may contain information about the landlord and tenant, description of the premises, such as the location of the property, its type, etc., terms of the lease, description of the business activity and other miscellaneous clauses pertaining to expiry of the LOI, exclusivity of the lease, etc.
Why is a Letter Of Intent needed?
A landlord may ask a prospective tenant for a Letter Of Intent, to ascertain the tenant's seriousness in leasing the space and also to find out the tenant's exact requirements.