Many tenants hire an attorney to review and negotiate lease terms. It can reduce your lease expenses and protect your pocketbook from future problems. Unfortunately, the legal fees can be significant. You can mitigate this expense by working with your attorney to negotiate a solid letter of intent (often referred to as a “LOI”) with your landlord covering the important lease terms.
Why does a Letter of Intent save money?
Complexity increases cost. A LOI is less complex than the lease and therefore quicker (and cheaper) to draft, review, and negotiate. And since the landlord typically prepares the first version of the lease, if they “get it right” the first time, you limit the time (and cost) your attorney will spend reviewing, negotiating and drafting lease terms.
Why should I pay my attorney to negotiate a letter of intent if the Landlord already prepares one?
Normally, landlords offer prospective tenants a LOI which is short on details and leaves out important deal points. This is done to secure a tenant’s commitment as soon as possible before the landlord has incurred significant time and expense. Understandable, from the landlord’s perspective.
Unfortunately, this approach simply shifts cost and risk to the tenant. If your attorney is identifying problems with the lease during the course of a 40 page lease review, it is going to be more expensive than identifying those same problems in a 4 page LOI. At this point, your only option is to spend time and money negotiating the lease or accept a lease that may increase your expenses and pocketbook exposures down the road.
What should I do?
Work with your attorney to negotiate a well thought out letter of intent. It will decrease the amount of work needed for your attorney to review, negotiate and finalize your lease.
During future blog posts we will cover key issues you should address in your LOI to save you time and money on lease negotiations.