Lease Process E5: Pros and Cons of Simple vs Complicated LOI

Simple vs Complicated LOI

A letter of intent, LOI, can be relatively simple or extremely complex. Both styles have pros and cons to consider.

A simple LOI can be generated quickly with little cost. These are most common when an organization is simultaneously considering multiple locations and is interested in moving quickly, but there are other reasons for simple LOI's, too.

If an organization is trying to decide between three or four locations, it makes sense to put out a one page LOI with basic items such rent, length of the term, and tenant improvement. This way, both the tenant and the landlord can start to see if they are in the same ball park. Getting a response to a simple LOI is more likely to happen quickly, so the organization can begin vetting multiple locations at once before spending too much time on any one particular location.

Complicated LOI's are useful in different ways. If the organization is confident in the location or if there are several other tenants interested in the space, the landlord has more leverage. A complex LOI usually passes through the attorney's desk before getting sent out to the landlord, so delivering a sophisticated LOI shows the organization is serious and has put in time and resources.

As companies gain more experience over time, their LOI's become more complex as a result of first hand bad experiences. This also serves to show the landlord that the organization is to be taken seriously.

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