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One of our clients, a restaurant operator, had generated great fanfare for their Korean fried chicken and other offerings served at their location at the Jersey Shore.

They later approached us to negotiate a written lease for a new location in Center City, Philadelphia. After retaining us, we came together to review the terms and conditions from the letter of intent that they had entered into with their future landlord. We went on to compare it to the written lease which was drafted by the landlord’s attorney.

In most situations involving a commercial lease arrangement, a letter of intent is entered into by the landlord and tenant. This document includes the important terms and conditions of the leasing arrangement and consolidates them in writing prior to the lease being prepared.  Under most circumstances, the letter of intent is not binding upon the parties and only a written lease under mutually acceptable terms and conditions executed by the parties will bind them.  

Not all letters of intent are created equal. Some do not account for all terms and conditions which may be of significance to the landlord or the tenant. The situation with our restaurant operator client was no different. The written lease (originally drafted by the landlord’s attorney) did not account for all of the work promised by the landlord and granted rights and remedies to the landlord which we believed were not reasonable under the circumstances. 

After several rounds revising the drafted lease, our restaurant operator client finally felt comfortable executing the terms and subsequently opened their business operations at the leased premises. Soon thereafter, our client came upon the opportunity to relocate their location at the Jersey Shore to a boardwalk in the charming town where they started off. Due to their prime location, they soon became extremely successful and popular within the area.

Unlike the situation regarding their location in Philadelphia, this agreement lacked a letter of intent and they instead received a draft of the written lease for execution. After we were retained by our client, through negotiations with the landlord, a written lease was executed allowing them to secure this new location.