Most commercial leases begin with a letter of intent, and the terms recorded there are difficult to reopen.
Non-binding, expressly. With binding exceptions for confidentiality, exclusivity where granted, and expense allocation. Without the statement, a detailed letter followed by conduct can create obligations.
What to include. Premises and measurement standard; term and options; base rent and escalations; the operating expense structure and base year; the tenant improvement allowance and who performs the work; delivery condition and date; free rent; assignment parameters; exclusivity; parking; signage; and security.
Measurement. Rentable area under a stated standard, with a remeasurement right. Rent quoted per square foot on an undefined measurement is not a price.
Delivery condition described specifically, since the difference between shell and improved condition can exceed a year of rent.
Exclusivity or good faith period during which the landlord will not market the space, which is the tenant’s principal protection while it incurs design and legal cost.
Approvals. Whether the letter is subject to lender, board or franchisor approval, stated rather than raised later.
What to omit. Detail that belongs in the lease and will simply be renegotiated. The letter should settle economics and leave legal mechanics to the document.