“Short” has its benefits – “get the hook in – then, reel it in.” It might get away, but, at the end of the day, your creel will be full. [Yes – creel = bucket for captured fish.] But, do you sometimes lose the fish you really wanted? Do you and the fish get too exhausted watching your respective post-LOI negotiators fight over the “gaps”?
I don’t think there’s an answer other than, “it depends.” But, let’s not forget, an LOI doesn’t have to be either short or long; it can be crafted to meet the anticipated negotiation. For example, its exclusive use right may be important to a tenant, but the details of the default remedies may not be. So, it behooves the tenant to see that the LOI, negotiated between the real stakeholders, not their hired gladiators, spells out the protected items or services AND spells out the tenant’s remedies. To reprise an earlier, enthusiastically received Blog entry, if the landlord strongly wants its prospective tenant’s lease extension option conditioned on the absence of a tenant default at the time of exercise, make it part of the discussion. That means place it in the LOI. If a recapture right is important to a landlord, get it in the LOI. Don’t let it first show up in Section 1,235 of the proposed lease.
This isn’t to say that the LOI has to mimic the final lease or that the attorneys or others who draft a lease aren’t up to the task, but it seems that experience has proven that it almost always Gets the Deal Done faster and with less angst if the LOI covers what each party thinks is important.
There is a place for “intentional ambiguity” in drafting LOIs, leases, and other agreements. That’s a topic on a long list of (yet unwritten) blog entries.
In the meantime, what’s your opinion? experience? philosophy? Let’s Ruminate together (but not that together – I didn’t like the image). Post your comments here at www.retailrealestatelaw.com.