LOIs require careful drafting and consideration. Too often LOIs contain provisions that are vague, inconsistent or lacking in detail, such as ROFO and ROFR clauses, which can lead to disagreements later when the non-drafting party receives the purchase agreement or lease from the drafting party and the provisions at issue are drafted in a manner contrary to the intent and best interests of the non-drafting party. At that point, things can start to turn contentious, with a lot of finger pointing. LOIs for lease deals often contain provisions that are taken from the broker’s boilerplate LOI that are not accurate or agreeable to the landlord (and which may be tucked into a miscellaneous section towards the end of the LOI and glossed over by the landlord) such as, by way of example only, representations that the space will be delivered in compliance with ADA and free of hazardous materials.It will save time, aggravation and legal fees in the long run to let your attorney quickly review the LOIs to avoid future problems when the parties have already invested considerable time, effort and money into the transaction and the tenant/purchaser may already be committed to the site. An attorney’s review of an LOI is definitely a value added endeavor. As stated so eloquently by Benjamin Franklin, “an ounce of prevention is worth a pound of cure”.
Daniel M. Halprin is a Member of Dawda Mann, Mulcahy & Sadler, PLC. For nearly 20 years he has been practicing real estate law, with a particular emphasis on leasing, acquisition and disposition transactions.