Free Commercial Lease Letter of Intent Template
A tenant-side commercial lease letter of intent covering rent, free rent, TI allowance, CAM caps, term, renewal, use, exclusivity and personal guarantee limits.
A commercial lease letter of intent (LOI) summarises the key business terms of a proposed lease before the full lease is drafted. It is usually non-binding on the lease terms, but it is the best stage to negotiate rent, allowances, caps and guarantees.
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LETTER OF INTENT: COMMERCIAL LEASE
Date: [DATE]
To: [LANDLORD NAME / BROKER], [ADDRESS]
From: [TENANT NAME], [ADDRESS]
Re: Proposed lease of [PREMISES ADDRESS, SUITE] ("Premises")
This letter sets out the principal terms on which Tenant proposes to lease the Premises. Except as stated in Section 20, it is not binding; a lease will be binding only when signed by both parties.
1. TENANT: [LEGAL ENTITY NAME].
2. PREMISES: Approximately [NUMBER] rentable square feet ([NUMBER] usable), [floor/suite], as shown in the attached plan.
3. USE: [DESCRIBE], and any lawful related use.
4. TERM: [NUMBER] years, starting on the earlier of Tenant opening for business or [NUMBER] days after delivery of the Premises with Landlord's Work complete ("Commencement Date").
5. BASE RENT: $[AMOUNT] per square foot per year [NNN / modified gross / gross], increasing [3]% annually.
6. FREE RENT: [NUMBER] months of base rent abatement [and operating expenses] after the Commencement Date.
7. OPERATING EXPENSES / CAM: Tenant pays its pro rata share ([PERCENT]%), estimated at $[AMOUNT] per square foot for [YEAR]. Increases in controllable expenses capped at [5]% per year. Exclusions include capital improvements, landlord financing and leasing costs, and costs caused by landlord negligence. Tenant may audit annually.
8. LANDLORD'S WORK: Landlord will deliver the Premises with [DESCRIBE, e.g., HVAC, electrical and plumbing in good working order, compliant with accessibility codes] at its cost.
9. TENANT IMPROVEMENT ALLOWANCE: $[AMOUNT] per square foot, paid [on completion / in progress payments]. Unused allowance may be applied to rent.
10. RENEWAL OPTIONS: [NUMBER] options of [NUMBER] years each at [95]% of fair market rent, on [6] to [12] months' notice.
11. EXCLUSIVE USE: Landlord will not lease space in the [property/center] to another tenant whose primary use is [DESCRIBE].
12. SIGNAGE: Tenant may install [building/storefront/monument] signage at its cost, subject to code.
13. PARKING: [NUMBER] spaces [reserved / unreserved] at [no charge].
14. ASSIGNMENT AND SUBLETTING: Permitted with Landlord consent, not unreasonably withheld, and permitted without consent to an affiliate or a buyer of Tenant's business.
15. PERSONAL GUARANTEE: [None / Limited to [NUMBER] months of base rent, reducing after [24] months of timely payment, with a good-guy release on [90] days' notice].
16. SECURITY DEPOSIT: $[AMOUNT], reducing to $[AMOUNT] after [12] months of timely payment.
17. CONTINGENCIES: Tenant obtaining permits and licences for its use [and financing] by [DATE].
18. RELOCATION: Landlord has no right to relocate Tenant.
19. BROKERS: [NAMES]; commissions paid by Landlord.
20. BINDING PROVISIONS: Only the following are binding: confidentiality of this letter's terms, and [exclusivity: Landlord will not negotiate with other tenants for the Premises for [30] days]. Either party may end negotiations at any time before a lease is signed.
Please confirm acceptance by signing below by [DATE].
TENANT: ______________________ Date: __________
LANDLORD: ____________________ Date: __________
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This free template is provided by ClauseAudit for general informational purposes and is not legal advice. Have it reviewed before use. Replace all [BRACKETED] placeholders.When to use this template
- Starting negotiations on retail, office, restaurant or industrial space.
- Comparing proposals from several landlords.
- Before a landlord's lawyer drafts the full lease.
How to fill it in
- Confirm rentable vs usable square footage and the rent type (NNN, gross or modified gross).
- Ask for free rent and a tenant improvement allowance.
- Cap controllable CAM increases and list exclusions.
- Secure renewal options, exclusivity and signage.
- Limit or remove the personal guarantee.
- Keep the non-binding statement, with only confidentiality and any exclusivity binding.
Key clauses to check
- Rent structure
- NNN leases add taxes, insurance and CAM on top of base rent.
- CAM cap
- Prevents unpredictable increases in shared costs.
- TI allowance and free rent
- Often worth more than a small rent reduction.
- Personal guarantee
- Easiest to limit at the LOI stage.
- Non-binding
- Make sure the LOI does not accidentally become a binding lease.
Frequently asked questions
Is a commercial lease LOI binding?
Usually not for the lease terms, but some provisions, such as confidentiality and exclusivity, may be binding if stated.
What should a tenant ask for in an LOI?
Free rent, a TI allowance, a CAM cap, renewal options, exclusivity and a limited personal guarantee.
What is the difference between rentable and usable square feet?
Usable is the space you occupy; rentable adds a share of common areas, and rent is usually charged on rentable.
Want to check if a contract is fair before you sign?
If someone sent you a commercial lease contract, don't guess. We flag risky clauses in plain English, tuned to your state, with a downloadable report and suggested-fix redline.
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This free template is general information, not legal advice, and is no substitute for a qualified attorney. Laws vary by state; have it reviewed by a lawyer before you use or sign it.