Letter of Intent to Lease Commercial Property

The commercial lease letter of intent is a document that summarizes the leasing terms for commercial property and presents the information in a condensed format to be reviewed prior to the execution of a formal agreement. The principal function of the letter is to prove that the tenant is a serious renter and to inform each party of the major details of the rental arrangement. Outlining the terms in this manner can help expedite the negotiation process and make sure there is no miscommunication prior to signing. Covered in the letter of intent will be important conditions which include the monthly rental amount, the contract length (a.k.a., contract term), monthly expenses, lease renewal options, and whether a security deposit will be required before the tenant is authorized to commence their tenancy.

Table of Contents

What is a Commercial Lease?

A commercial lease is a rental agreement between a landlord and a tenant who wishes to lease a commercial space for retail, industrial, or office use. The lease consists of terms and conditions that determine the responsibilities of each party during the contract term. Landlords will often fit the rental space to accommodate the tenant’s business needs. As a result, the landlord will typically require a longer contract term to ensure a return on their investment (3 to 5 years is standard).

Commercial Lease Agreement – A legally binding rental contract between a landlord and a business tenant.

Download: Adobe PDF, MS Word, OpenDocument




Sample – Commercial Lease Letter of Intent


Effective Date: November 2, 2019

RE: Intent to Lease Commercial Property

I. The Lessee: First Financial Investments (the “Lessee”).

II. The Lessor: Ruth Simmons (the “Lessor”).

III. Address of Premises: 943 Main St., Capital City, Vermont 05001 (the “Premises”).

Additional Description: None.

IV. Lease Term: The term of the lease shall be for a period of 3 years commencing on the 1st day of January, 2020 and expiring on the 1st day of January, 2023.

V. Use of Leased Premises: The Lessee intends to use the Premises for the following purpose: Office space for the business “First Financial Investments.”

VI. Base Rent: The base rent of Two Thousand Dollars ($2,000) shall be paid monthly on the 1st of each month with the first payment due upon the commencement of the lease (the “Base Rent”).

VII. Expenses: In addition to the Base Rent, the Lessee shall be required to pay the following monthly expenses: Common Area Maintenance (CAM).

The Lessor shall be required to pay the following monthly expenses: All other costs related to the property.

VIII. Security Deposit: A security deposit in the amount of Two Thousand Dollars ($2,000) shall be due prior to or upon the signing of a lease.

IX. Lease Renewal: Lessee has the right to renew the lease a total of 1 renewal period which may be exercised by giving written notice to the Lessor no less than 90 days prior to the expiration of the lease.

X. Rent Increase: Upon a lease renewal, the Base Rent shall increase by Fifty Dollars ($50).

XI. Subletting: The Lessee may not sublet the Premises without first obtaining the prior written consent of the Lessor.

XII. Late Rent: If the Lessee fails to pay the total rent payment for more than 3 days after it is due, the following penalty may be charged: A late fee of Fifteen Dollars ($15) per day until the overdue amount is paid.

XIII. Binding Effect: This Letter of Intent shall be considered non-binding. Therefore, the parties acknowledge that this Letter of Intent is not enforceable by any Party. The terms outlined herein are solely for the purposes of reaching a later agreement in the future, of which, the Lessee and Lessor are not bound.

XIV. Additional Provisions: None.

XV. Governing Law: This Letter of Intent shall be governed under the laws of the State of Vermont.


Lessee’s Signature ______________________ Date ______________________

Print Name ______________________


Lessor’s Signature ______________________ Date ______________________

Print Name ______________________

How to Write

Download: Adobe PDF, Microsoft Word (.docx), Open Document Text (.odt)


Step 1 – Open The Commercial Lease Letter Of Intent

When you are ready to download the Commercial Lease Letter Of Intent, determine the version you wish to work with. The three links in this section (“Adobe PDF,” “Microsoft Word…,” and “Open Document Type (.ODT)”


Step 2 – Produce The Lessor’s Return Address Information

Document the return address of the Sender on the first three blank lines in the upper-left of this page. Typically, this is the Property Management Company or Property Owner with the authority to lease the premises thus, make sure to record the full legal name of this entity before entering the complete address.   


Step 3 – Declare The Date Of This Document’s Applicability

The official “Effective Date” for this paperwork will set its status as active. Produce a record of this month, calendar day, and year on the accurately labeled empty line below this document’s return address.


Step 4 – Direct Letter To The Potential Lessee

The next three empty lines are reserved for the formal address of this paperwork’s Recipient. Thus, in the case of the letter we are working, report the full name and address of the Lessee who shall review this document as a precursor to entering the lease it discusses.   


Step 5 – Formally Declare The Lessee’s Identity

Regardless of who the Sender and Receiver are, the full name of “The Lessee” is required in the first article of this letter. Seek out the bold word “Lessee” then input this Party’s name on the blank line that follows this label.   


Step 6 – Present The Lessor’s Legal Name

The second article of this letter is titled “II. The Lessor” and should be populated with the Property Owner, Landlord, or Management Company’s legal name. This must be the party that has the authority to lease the commercial premises to the Lessee above and will ultimately require that rent be paid in exchange. The empty line between preceding the parentheses label “Lessor” is set to observe this. 


Step 7 – Identify The Leased Property By Address

The property being leased as a commercial space will have to be documented for the purpose of this letter. Article “III. Address Of Premises” supplies the space needed for this and calls proper attention to this information with its wording. Thus, locate the line between the bold phrase “Address Of Premises” and the parenthesis label “The Premises.”  Notice the area in this article labeled with the term “Additional Description.” This line will accept content that can better identify the property. For instance, structures such as billboards, gas pumps, or outdoor seating should be reported if they are present on the premises being leased. 


Step 8 – Discuss The Leasing Period Offered

The “Lease Term” must be solidified in the next section. The fourth article (“IV. Lease Term”) takes the form of a statement that must be supplemented with some defining content. The first task will be to identify how many years and months will make up the length of time the Lessor and Lessee will agree as the life span of the lease. Two checkboxes, followed by a blank line and the term “Year(s)” and “Month(s).” Depending on the intended term of the lease you may check one or both items but must enter the appropriate number to define this time. In the example below, the lease term will be for two years and six months so both boxes have been checked to indicate that the number that follows applies to that period. 


Step 9 – Report The Leasing Purpose Of The Property

The business actions the Property Owner, Landlord, or Management Company will allow on-premises while the lease is in effect should be documented to reflect the terms of the lease. The blank lines that are placed in “V. Use Of Leased Premises” expect this report. Make sure to record activities that are allowable by the lease that will be signed. 


Step 10 – Document The Requested Base Rent

This paperwork must accurately represent the amount of money required for rent by the Lessee for the property. Write out the amount of money required for control of the commercial space every month by the Lessor on the first blank line in the “VI. Base Rent article then record the same amount numerically on the empty line after the dollar sign. 


Step 11 – Furnish The Expenses To Both Parties

The commercial lease being discussed will address the issue of “Expenses.” The seventh article will seek a report on the additional financial requirements of the commercial property while the lease is effective. The first set of blank lines in this article will seek a transcription of the “…Monthly Expenses” the Lessee will be responsible for in addition to the rent.

The second set of blank lines will require documentation of all the “…Monthly Expenses” the Lessor will be held responsible to pay while participating in the lease with the Lessee. 


Step 12 – Record The Required Security Deposit Amount

Most commercial leases will insist that the Lessee submit a predetermined sum of money to the Lessor to hold in Lessee-caused damages to the commercial property. Typically, this amount will be held in a separate interest-bearing account and is released to the Tenant at the time the lease successfully terminates with the commercial property’s physical condition meeting the Lessor’s expectations. This dollar amount is expected on the first blank line in “VIII. Security Deposit” section. Write this amount out exactly as it appears int he concerned lease. The second space, after the dollar sign, requires you to reproduce this value numerically as its contents.   


Step 13 – Indicate If A Lease Renewal Option Will Be Presented

The next topic will be that of renewal. In “IX. Lease Renewal” one of two checkboxes will need to be selected to inform the Potential Lessee whether a renewal of the lease terms will be allowed or not. If the Lessee will be given the opportunity to renew the lease, then mark the first checkbox statement and furnish the number of “Renewal Period(s)” on the first blank line. If you have selected the first checkbox and produced the number of times the Lessee can renew the lease, then you must also record the number of “Days Prior” to the successful termination of the lease when a notice issued by the Lessee regarding this topic must be received by the Lessor. The contents of such notice will be expected to deliver the Lessee’s intentions to either continue or discontinue the lease.    If the Lessee will not be allowed to renew the terms of the lease and will be expected to vacate the premises upon its termination, then mark the second checkbox “Lessee May Not Renew…” 


Step 14 – Solidify The Status Of A Potential Rent Increase

The subject of renewals will usually accompany the topic of rent increases in most (if not all) leases. Therefore, this letter intends to address the status of “Rent Increase” in article ten (“X. Rent Increase”). Four checkbox statements are presented in this section. One of these must be selected to document the status of rent increases with renewals as defined by the lease. If the rent will increase upon renewal by a specific percentage of the rent that is currently being paid (at the time) then mark the first checkbox. This requires that you write out the percentage that will be applied on the first line and furnish it numerically on the second line. Leave the first checkbox unmarked if this does not apply and proceed to review the next three choices. 

If the rent will be increased by a predetermined dollar amount, then the second statement in this section must be selected. Once you have marked the second checkbox, you must also define the exact dollar amount the rent will be increased (upon renewal) by spelling it out on the first blank line then supplying it numerically after the dollar sign.  The third choice in this section will set any rent increase (with renewal) as the product of the base rent being paid at the time multiplied by the CPI’s (Consumer Price Index) listed annual change as recorded in the latest publication by the Bureau of Labor Statistics.  If the rent will not increase with a renewal or if the rent will not increase because there will be no renewal option, then select the fourth checkbox (“Not Increase”)   


Step 15 – Disclose The Actions That Will Be Taken In Response To A Late Rent Payment

Article “XII. Late Rent” is the next section to occupy our focus. Here, two statements stating the penalty that will be owed by the Lessee for paying the rent late are on display. If a specific dollar amount will be charged to the Lessee whenever the rent is late, then select the checkbox corresponding to the phrase “A Late Fee Of…” Once this option is selected you must complete its language with a report on the late fee dollar amount by entering it so it can be read on the first blank line then recording its numerical value. 

If “An Interest Rate…” will determine any required late fees for the rent, then produce this percentage on the first and second blank lines in the next choice after you have marked the appropriate checkbox. Note, you must write out the percentage on the first of these lines then type in the numbers representing it just before the percent sign.   


Step 16 – Deliver The A Record On This Letter’s Binding Effect

The binding effect of this letter must be declared in “XIII. Binding Effect.” If this letter requires that both Lessor and Lessee understand that this letter is considered enforceable as is and its obligations are not challengeable by either party in a court of law, then mark the box labeled “Binding” in this section.    If this is not the case, and the terms defined in this letter are not necessarily enforceable without the execution of a signed future agreement then mark the “Non-Binding” checkbox in “XIII. Binding Effect.”


Step 17 – Disclose Any Remaining Terms And Conditions

The fourteenth section labeled “XIV. Additional Provisions” applies an empty area where any terms, circumstances, conditions, or limitations that have been left unaddressed may be documented. Keep in mind, everything in the lease this letter concerns must be summarized in one form or another. If there are no additional perks, restrictions, or requirements upon these parties as defined by the lease, you may leave this area unattended or simply type in the word “None.” If any attachments will be provided as part of this letter, make sure they are listed in this section as well.   


Step 18 – Document Which State Holds Jurisdiction Over This Paperwork

The next section down, “XV. Governing Law,” seeks a declaration of the jurisdiction where any disagreements regarding this paperwork will be reviewed (by the courts). Report this content on the blank line presented in this area.


Step 19 – Apply The Lessee’s Signature To Finalize this Document

This letter will only be considered complete and a valid representation of intent when the completed paperwork is signed by the Lessee and Lessor. The “Lessee” signature section is directly underneath “XV. Governing Law” and is titled “Lessee.” Here the Lessee must sign and date this document after reviewing it to his or her satisfaction.  The Lessee is also required to satisfy the “Print Name” line with his or her own. Once done, he or she may relinquish it to the Lessor.   


Step 20 – The Lessor Must Sign This Paperwork To Execution

The Lessor’s responsibilities as explained in the above articles must be acknowledged by this Party. Once a thorough review has been completed, he or she must sign the “Lessor’s Signature” line then report the current “Date.”

After signing his or her name the Lessor must supply the printed name of his or her signature on the “Print Name” line.