What is the function of a letter of intent in commercial leasing?

The function of a letter of intent in commercial leasing primarily serves as a preliminary document that outlines the basic terms of a lease agreement before it is finalized. This includes key components such as the proposed rental rate, lease duration, and any other essential lease provisions. By capturing these fundamental elements, the letter of intent helps both the landlord and tenant reach a mutual understanding, establish the framework for negotiations, and outline the intent to enter into a lease agreement.

This tool acts as a foundational step in the leasing process, providing clarity on the expectations of both parties and facilitating further discussions leading to a formal lease agreement. It does not finalize lease agreements, which occur later in the process; therefore, it emphasizes initial terms rather than permanent adjustments to rental pricing or requests for alterations. In essence, the letter of intent is an essential communication tool that sets the stage for the more detailed and binding lease documents that follow.