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3 Keys to Success in Letters of Intent - V0005 - YouTube
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hello and welcome to Cindy Knight
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University Civic night is the online
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home of commercial real estate expertise
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my name is Roger ores I'm a commercial
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real estate broker and the co-founder of
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Civic night commercial real estate my
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path to commercial real estate brokerage
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began with about five years as a civil
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engineer and construction manager
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followed by a 15 year career as an
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attorney in my law practice I focused on
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real estate law construction law and
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Indian law I now use the experience
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gained in these professions to help my
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commercial real estate clients in a wide
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variety of transactions I also enjoy
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sharing some months experience with you
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in these videos letters of intent are
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short documents that outline the basic
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terms of a deal between two parties
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there used quite commonly in commercial
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real estate and land transactions in
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this video I'm going to offer three keys
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to success for letters of intent the
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purpose of an letter of intent also
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known as an LOI is to boil down the
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basic deal terms and these deal terms
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are primarily business in nature not so
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much legal in nature legal terms are
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going to be dealt with in the
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substantive document that will follow
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the letter of intent
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examples of substantive documents
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include a lease or purchase and sale
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agreement or something like that if the
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business term is important to you make
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sure it gets in the letter of intent
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don't rely on some sort of a sidebar
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conversation or an understanding of how
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the document will be interpreted if it's
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important you get it in the LOI some
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examples of what these important
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business terms are include the following
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the price of course or the rent rate or
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the term how long will this lease be
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other examples are going to be specific
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to your particular business for instance
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if I'm if you want to buy land do you
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have the right to the minerals on the
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property or if you are going into a
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lease space as a commercial tenant do
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you have the exclusive
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use of your particular business for
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example do you alright are you allowed
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to be the only restaurant in that strip
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center or if you are in a business
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situation and you have a lot of
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customers that come to your location the
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parking is going to be very important to
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you you want to make sure that you have
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enough parking in the center for your
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customers as well as your employees
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these are just a handful of examples but
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hopefully they'll be get you thinking
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about what kind of business terms are
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going to be important to you and what
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should be included in the LOI well
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hopefully that first key to a successful
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LOI
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was pretty obvious now we're going to
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talk about the second key to success in
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an LOI and that is to understand that
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most letters of intent are non-binding
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and that you should keep them that way
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letters of intent often include language
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that they are non-binding in other words
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that neither party is going to be bound
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to the document and that either party
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can walk away from the document no harm
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no foul in theory this is beneficial to
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both parties because both parties have
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the ability to move forward together and
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trying to get a deal done but without
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the legal obligations or the legal risk
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that could come about if they are found
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to have a binding contract however what
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could complicate things is if the
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parties sign the letter of intent then
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the court will would have to decide
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whether the signatures mean anything or
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not or whether the non-binding language
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is going to control I had a law
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professor once who had us read a case
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and one of the lines from the case stuck
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out with me and I remember that this
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many years later and that line was
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signatures aren't ornaments
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it will likely be much easier to walk
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away from a non-binding letter of intent
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that isn't a sign than it is to walk
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away from a non-binding letter of intent
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that is signed additionally if the
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letter of intent contains the deal terms
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that are important to both parties which
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is what I recommended in my first key to
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success a few minutes ago then it is
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likely that the parties are going to
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continue to negotiate the deal and
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eventually arrive at substantive
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documents that both will feel
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comfortable in signing at the time of
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closing and that brings me to my third
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point and the third key to success in
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LOI is is to make sure that the deal
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terms that are part of the LOI are
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included in its substantive documents I
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can't tell you how many times I've
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reviewed first drafts of contracts or
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purchase and sale agreements or
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agreements to lease in which the terms
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of the letter of intent weren't in those
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documents the letter of intent is a
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great tool for boiling down the key
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business terms into one document so make
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sure you go the extra step and make sure
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that those key business terms then are
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included in the Docs that you will be
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signing and that will become the Docs
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you live by for the transaction so to
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sum up first of all make sure that the
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deal terms that are important to you are
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included in the letter of intent
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secondly make sure that you don't screw
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up the non-binding nature of a letter of
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intent by signing it and number three
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make sure that the substantive documents
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that you will be signing contain the
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deal terms that were important to you in
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the letter of intent civic Night is a
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commercial real estate brokerage we
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serve commercial real estate buyers and
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sellers investors and commercial tenants
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throughout the United States including
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projects in Indian country you can find
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more information related to commercial
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real estate along with more videos
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similar to this one at our website wwf/e
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AG ni te comm due to an increasing
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demand for our services civic net is
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actively recruiting highly skilled and
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experienced commercial real estate
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professional
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contact us on our website to learn more
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also if you would like Civic night to
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help you buy sell or lease commercial
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real estate please contact us on our
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website if you like this video please
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give it a thumbs up and any comments
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below and please subscribe to our
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youtube channel thank you for watching
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this presentation is for general
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information purposes only it is not to
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be construed as providing any advice
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with their legal real estate tax or
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otherwise
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