A Letter of Intent is a non-binding agreement between the Landlord and the proposed tenant that establishes lease economics to be integrated within the final lease agreement. These economics are normally limited to the lease rate, tenant build-out allowance, and free rent offered by the Landlord.
The purpose of the Letter of Intent is to arrive at the lowest lease costs and see if agreement can be achieved with the Landlord prior to spending many hours negotiating the complex business terms necessary to achieve a well-negotiated final lease.
Like most real estate transactions, the starting point is merely the “asking” price. The Landlord’s starting point usually includes an inflated quoted rate in order to be able to agree to a rate reduction. Dental Real Estate Experts typically saves an average of 8 to 12% in overall lease costs.
There are many more dollars saved in provisions throughout the entire lease contract that protect the practitioner’s large capital investment. These provisions are not legal in nature – they are negotiated for business protection and risk avoidance.