A LOI or letter of intent is a document used to express interest that the tenant is keen to take up the lease at a particular location be it commercial, industrial or residential properties in Singapore.
In a situation whereby a tenant has the intention to rent the property such as a factory or warehouse after arranging for a viewing session, it is common for the interested party to express his or her interest using the letter of intent.
The letter of intent or the LOI is usually prepared and passed to the landlord to express the prospect’s intention to lease the property. The LOI is usually also accompanied by the good faith deposit which may be in the form of cheque or funds transfer to secure the unit. The good faith deposit may also be used to form part of the security deposit once the offer is accepted by the landlord.
Some Reasons Why A letter of Intent is Important
It shows the landlord that you as a prospect are sincere and serious about renting the unit for the said lease term as it is documented down clearly on the letter of intent together with the proposed terms. For certain cases, where change of use may be necessary, it will also be included in the letter of intent.
Also, if the landlord is agreeable and have accepted the terms of the letter of intent, it would mean that you have secured the unit and you are assured that owner would not be renting the property to any other party. Once the letter of intent is finalised and signed by both parties, the tenancy agreement should be signed by both parties within the stipulated number of days.
In a case whereby the landlord is not agreeable to terms in the letter of intent, the landlord may choose to counter propose or reject and return the security deposit to the prospect. If the offer is rejected by the landlord or if the counter proposed terms are not accepted by the prospective tenant, the landlord will market the property or look for other tenants.
When submitting the letter of intent, it may also be necessary to send a copy of your company’s ACRA business profile as it will include details such as your company’s nature of business and other details such as paid up capital.