# Offer To Lease Expert

> Use when drafting or reviewing an offer to lease, letter of intent, or term sheet, deciding whether it is binding or non-binding, structuring conditions precedent and deposit provisions, negotiating exclusivity and acceptance deadlines, or converting a signed offer into a formal lease.

- Skill: `reggiechan74/offer-to-lease-expert` (Agent Skill)
- Install (CLI): `npx skillmds@latest add reggiechan74/offer-to-lease-expert`
- Raw SKILL.md: https://api.skillmd.com/api/skills/reggiechan74/offer-to-lease-expert/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Coding & Dev Tools
- Author: reggiechan74 (https://skillmd.com/u/reggiechan74)
- Updated: 2026-09-17
- Page: https://skillmd.com/skills/reggiechan74/offer-to-lease-expert

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## What is an Offer to Lease?

**Offer to Lease** = Preliminary agreement documenting key business terms BEFORE drafting the full formal lease. Sets framework for negotiations and lease preparation.

**Purpose**:
- Lock in key deal terms early
- Create exclusivity period for tenant
- Document understanding before incurring legal costs
- Provide framework for landlord's form lease

**Alternative names**: Letter of Intent (LOI), Term Sheet, Heads of Agreement, Memorandum of Understanding (MOU)

## Binding vs Non-Binding

**CRITICAL DISTINCTION**: Most offers to lease are **non-binding** on the business terms but **binding** on specific provisions (confidentiality, exclusivity, good faith negotiation, deposit).

### Standard Structure

**Non-Binding Provisions** (business terms):
- Rent amount and escalations
- Term and renewal options
- Premises size and location
- TI allowance and landlord's work
- Operating expenses and exclusions
- Use clause
- Parking allocation

**Binding Provisions**:
- **Exclusivity**: Landlord takes property off market for negotiation period (30-90 days)
- **Deposit**: Tenant pays good faith deposit (refundable if conditions not met)
- **Confidentiality**: Terms remain confidential
- **Good faith negotiation**: Parties negotiate lease in good faith
- **Expiry**: Offer expires if lease not executed by deadline
- **Costs**: Who pays lease drafting costs

### Language Making it Non-Binding

**Standard clause**:
"This Offer to Lease is not a binding agreement to lease the Premises and does not create any legally enforceable obligations except as expressly stated herein. The parties' obligations are conditional upon execution of a formal lease acceptable to both parties and their respective legal counsel."

**"Subject to lease"**: All terms subject to parties agreeing on formal lease documentation.

### When Offer Becomes Binding

Offer can become binding contract if:
1. **All material terms agreed**: Parties agreed on all essential terms (no gaps)
2. **Intention to be bound**: Language indicates parties intended to create binding agreement
3. **No "subject to lease" language**: Missing standard disclaimer
4. **Consideration exchanged**: Deposit paid and accepted
5. **Conduct**: Parties act as if bound (tenant takes possession, pays rent, makes improvements)

**Risk**: If offer is too detailed and parties act on it, court may find binding lease was created even if parties intended only preliminary agreement.

## Key Provisions

### Premises
- Rentable area (specify measurement standard: ANSI/BOMA)
- Unit/suite number
- Exclusive use of parking spaces (#)
- Floor plan attached if available

### Term
- Commencement date (fixed date or "upon substantial completion of landlord's work")
- Lease term (e.g., 5 years)
- Renewal options (e.g., two 5-year options at FMV)

### Rent
- Base rent ($/SF/year) by year or with escalation formula
- Free rent period (# months)
- First rent payment date
- Operating expenses ($/SF estimate, tenant's proportionate share %)
- Additional rent (utilities, taxes, insurance)

### Tenant Improvements
- **Landlord's work**: Description or reference to work letter to be prepared
- **TI allowance**: $/SF or total dollar amount
- **Turnkey vs allowance**: Who manages construction?
- **Timing**: Substantial completion date

### Security Deposit
- Amount (typically 3-6 months' rent)
- Form (cash, letter of credit, or personal guarantee)
- Reduction schedule (e.g., reduces to 1 month after 2 years good performance)

### Use
- Permitted use (specific or general)
- Exclusivity (if any - landlord won't lease to competing uses)

### Conditions Precedent
Terms binding only if conditions satisfied:

**Tenant's conditions**:
- Landlord provides evidence of title and right to lease
- No environmental contamination (Phase I ESA acceptable to tenant)
- Zoning permits tenant's intended use
- Landlord can obtain building permits for landlord's work
- Tenant obtains financing
- Tenant's board approval

**Landlord's conditions**:
- Tenant provides satisfactory financial statements
- Tenant's credit check satisfactory
- Personal guarantee from principals (if required)
- Current tenant vacates (if premises occupied)

**Timing**: Conditions must be satisfied or waived by date certain (typically 30-60 days)

**Waiver**: If condition for one party's benefit, that party can waive

### Exclusivity Period
- Landlord takes premises off market for negotiation period (30-90 days)
- Landlord will not negotiate with other tenants
- If tenant doesn't execute lease by deadline, exclusivity expires
- Landlord can market premises again

**Tenant's leverage**: Longer exclusivity gives tenant time for due diligence

**Landlord's risk**: Property off market, loses other opportunities

**Balance**: 60 days is typical for straightforward deals; 90 days if complex landlord's work or zoning issues

### Good Faith Deposit
- Amount: $5K-$50K depending on deal size
- Held in trust by landlord's lawyer or broker
- **Refundable if**: Conditions precedent not satisfied, landlord breaches, parties can't agree on lease after good faith negotiation
- **Non-refundable if**: Tenant breaches, tenant fails to negotiate in good faith, tenant fails to satisfy tenant's conditions without reasonable efforts

### Lease Preparation
- Landlord prepares lease using landlord's standard form
- Tenant has right to review and negotiate (typically 15-30 days)
- Parties negotiate in good faith
- Legal costs typically borne by each party (sometimes landlord pays tenant's legal fees up to cap, e.g., $2K-$5K)

### Acceptance Deadline
- Offer open for acceptance until specific date and time
- Revocable until accepted (unless supported by consideration)
- Acceptance method: Signed copy delivered to offeror
- If not accepted by deadline, offer is void

### Expiry of Exclusivity/Binding Lease Deadline
- If formal lease not executed by date certain (e.g., 60-90 days from acceptance), offer terminates
- Neither party obligated
- Deposit returned to tenant (unless tenant in breach)

## Landlord Considerations

**Goals**:
1. **Lock in tenant**: Prevent tenant from shopping other properties
2. **Minimize landlord obligations**: Keep offer simple, defer details to lease negotiation
3. **Conditions precedent**: Build in outs (if can't get permits, if tenant credit poor)
4. **Protect deposit**: Make deposit non-refundable if tenant backs out
5. **Limit exclusivity**: Short period (30-45 days), hard deadline for lease execution

**Risks**:
- Premises off market during exclusivity (lost opportunities)
- Detailed offer may be deemed binding contract
- Tenant may use offer to negotiate better deal elsewhere

**Negotiation points**:
- Short exclusivity (30-45 days)
- Landlord's standard form lease governs
- Minimal conditions precedent for landlord
- Deposit non-refundable if tenant breaches or fails to negotiate in good faith
- Legal costs borne by each party

## Tenant Considerations

**Goals**:
1. **Lock in deal terms**: Get landlord committed to rent, TI, term before spending on legal fees
2. **Exclusivity**: Prevent landlord from negotiating with others while tenant completes due diligence
3. **Conditions precedent**: Build in outs (if zoning doesn't work, if financing falls through, if environmental issues)
4. **Refundable deposit**: Protect deposit if deal doesn't close through no fault of tenant

**Risks**:
- Deposit at risk if tenant backs out
- Short exclusivity may not give enough time for due diligence
- "Landlord's standard form lease" may be onerous
- Offer may lack critical tenant protections (SNDA, operating expense exclusions, assignment rights)

**Negotiation points**:
- Longer exclusivity (60-90 days)
- Include key tenant protections in offer (SNDA, operating expense exclusions, assignment/sublet rights, renewal options)
- More conditions precedent for tenant (zoning, financing, board approval, environmental)
- Deposit refundable if conditions not satisfied or parties negotiate in good faith but can't agree on lease
- Right to review landlord's form lease before offer becomes binding
- Landlord pays tenant's reasonable legal fees (cap at $5K)

## Conditions Precedent Drafting

**Objective condition** (preferred): Clear test, no discretion
"Tenant obtaining a Phase I Environmental Site Assessment acceptable to tenant, acting reasonably"

**Subjective condition** (avoid): Unlimited discretion, bad faith risk
"Tenant's satisfaction with premises" (too vague)

**Time limits**: All conditions must have deadline for satisfaction or waiver
"Landlord to deliver Phase I ESA within 30 days of acceptance"

**Due diligence standard**: "Acting reasonably" or "commercially reasonable efforts"
Prevents party from using condition as escape clause in bad faith

**Mutual conditions**: Both parties must satisfy (e.g., "Parties negotiate and agree on formal lease within 60 days")

## Converting Offer to Binding Lease

Once offer accepted and conditions satisfied:

1. **Landlord prepares formal lease** (typically landlord's standard form incorporating offer terms)
2. **Tenant reviews** (15-30 days)
3. **Negotiations** on additional provisions not in offer
4. **Execution**: Both parties sign lease
5. **Conditions precedent in lease satisfied**: Permits obtained, financing closes, etc.
6. **Commencement**: Lease takes effect, tenant takes possession

**Common issue**: Landlord's form lease conflicts with offer terms → Offer terms prevail

**Best practice**: Attach offer to lease as schedule, state "In event of conflict between Offer and Lease, Offer terms prevail"

## Deposits

### Refundable vs Non-Refundable

**Refundable if**:
- Conditions precedent not satisfied (landlord can't get permits, tenant's financing falls through)
- Landlord breaches (landlord refuses to negotiate, landlord leases to someone else)
- Parties negotiate in good faith but can't agree on lease terms

**Non-refundable if**:
- Tenant breaches (tenant stops responding, tenant negotiates in bad faith, tenant leases elsewhere)
- Tenant fails to satisfy tenant's conditions without reasonable efforts (tenant doesn't apply for permits, doesn't submit complete financials)
- Tenant unilaterally terminates without valid reason

**Application if lease executed**: Deposit typically applied to first month's rent or security deposit

### Holding Deposit in Trust

Deposit held by:
- Landlord's lawyer (in trust)
- Tenant's lawyer (in trust)
- Real estate broker (in trust)
- Escrow agent

**Not by landlord directly** (would indicate binding contract, consideration paid)

## Acceptance and Revocation

**Offer is revocable** until accepted (unless supported by consideration)

**Acceptance**: Offeree signs and delivers copy to offeror

**Timing**: Must be accepted by deadline stated in offer

**Communication**: Acceptance effective when received by offeror (not when sent)

**Counter-offer**: Any change to offer terms is rejection + counter-offer (resets negotiation)

## Exclusivity and Good Faith Negotiation

**Exclusivity provision** (binding):
"Landlord agrees that for 60 days from acceptance, Landlord will not market Premises to other tenants or negotiate lease with any other party."

**Breach**: If landlord leases to someone else during exclusivity, tenant can sue for damages (wasted costs, lost opportunity)

**Good faith negotiation** (binding):
"Parties agree to negotiate formal lease in good faith based on terms in this Offer."

**Breach**: If party negotiates in bad faith (unreasonable positions, stops responding, makes excessive demands), other party can sue for damages

**"Good faith" standard**: Honest dealing, reasonable positions, timely responses, willingness to compromise on non-material terms

## Common Issues

**Issue 1: Offer too detailed, becomes binding contract**
**Solution**: Include clear "subject to lease" language, state non-binding except for specific provisions

**Issue 2: Conditions precedent too vague**
**Solution**: Objective tests, time limits, due diligence standards ("acting reasonably")

**Issue 3: Short exclusivity doesn't give tenant enough time**
**Solution**: Negotiate 60-90 day exclusivity with conditions precedent tied to milestones

**Issue 4: Landlord's form lease conflicts with offer**
**Solution**: Attach offer to lease, state offer terms prevail in conflict

**Issue 5: Deposit non-refundable even if landlord breaches**
**Solution**: Negotiate deposit refund if landlord breaches or conditions not satisfied

**Issue 6: No specificity on landlord's work**
**Solution**: Attach preliminary work letter or floor plan to offer

**Issue 7: Parties can't agree on lease after good faith negotiation**
**Solution**: Include termination provision - if parties negotiate in good faith but can't agree within exclusivity period, offer terminates and deposit refunded

## Best Practices

**For Landlords**:
- Simple offer (defer details to lease negotiation)
- Short exclusivity (30-45 days)
- Landlord's standard form lease governs
- Few conditions precedent for landlord
- Deposit non-refundable if tenant breaches
- Clear "non-binding except as stated" language

**For Tenants**:
- Include key protections in offer (SNDA, operating expense exclusions, assignment rights)
- Longer exclusivity (60-90 days)
- More conditions precedent (zoning, financing, environmental)
- Deposit refundable if conditions not satisfied or good faith negotiation fails
- Right to review landlord's form before committing
- Landlord pays tenant's legal fees (cap at $5K)

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