While letters of intent are not binding in many states, oftentimes national tenants will not allow renegotiation of any memorialized terms once the LOI is signed. Thus, it is always advisable for landlords to have an attorney review before it is executed. That being said, the following is a guide for landlords to follow when beginning negotiations with a tenant.
(1) CAM caps
Tenants will often require a cap on the annual increase of their common area expenses. Landlords should ensure that only “controllable” expenses are capped, which should exclude snow, ice, insurance, and tax increases.
Additionally, it is not unusual for a tenant which has many locations to only review common area maintenance charges when either the tenant is ready to renew the lease, when estoppels are requested, or periodically over numerous years. Leases should provide that the landlord must be notified of any dispute in the accounting of common area expenses within twelve months after receipt of landlord’s reconciliation report.