Commercial Lease Letter of Intent (Multi-Tenant) - New York

LETTER OF INTENT

MULTI-TENANT COMMERCIAL LEASE -- STATE OF NEW YORK

Date: [__/__/____]

CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY

IMPORTANT NOTICE REGARDING BINDING EFFECT UNDER NEW YORK LAW: This Letter of Intent ("LOI") is intended to be non-binding except as expressly stated in Section 18 below. Under New York law, the Statute of Frauds (N.Y. GOL § 5-703) requires that agreements for the leasing of real property for more than one year be in writing and signed by the party to be charged. New York courts have held that an LOI may be enforceable if it contains all material terms and reflects the parties' intent to be bound, even where a more formal agreement is contemplated. Courts will examine the totality of the circumstances, including the language used, the context of negotiations, and whether open terms remain. Both parties are advised to seek independent legal counsel before executing this LOI.

1. PARTIES

Landlord:

• Legal Name: [________________________________]
• Entity Type: [________________________________]
• State of Formation: [________________________________]
• Address for Notices: [________________________________]
• Contact Person: [________________________________]
• Email: [________________________________]
• Phone: [________________________________]

Tenant:

• Legal Name: [________________________________]
• Entity Type: [________________________________]
• State of Formation: [________________________________]
• Address for Notices: [________________________________]
• Contact Person: [________________________________]
• Email: [________________________________]
• Phone: [________________________________]

Guarantor (if applicable):

• Name: [________________________________]
• Relationship to Tenant: [________________________________]

2. PREMISES AND BUILDING

• Building Name: [________________________________]
• Building Address: [________________________________], New York [____]
• Borough/County: [________________________________]
• Suite/Unit Number: [________________________________]
• Approximate Rentable Square Footage: [________________________________] RSF
• Approximate Usable Square Footage: [________________________________] USF
• Rentable-to-Usable Ratio (Loss Factor): [________________________________]%
• Floor(s): [________________________________]
• Building Class: ☐ Class A ☐ Class B ☐ Class C
• Building Type: ☐ Office ☐ Retail ☐ Mixed-Use ☐ Industrial/Flex ☐ Other: [____________]
• Total Building Size: [________________________________] RSF
• Number of Tenants in Building: [________________________________]
• Current Occupancy Rate: [________________________________]%
• Year Built / Last Renovated: [________________________________]

2.1 Building Ownership Structure

New York Practice Note: If the Building is owned by a cooperative corporation or condominium, additional approvals may be required. Co-op/condo boards may impose requirements on tenant alterations, insurance, and use. Verify the ownership structure and any applicable proprietary lease or declaration requirements.

• Ownership Structure: ☐ Fee Simple ☐ Condominium Unit ☐ Co-op ☐ Ground Lease
• If Ground Lease: Expiration date: [__/__/____]; Ground Lessor consent required: ☐ Yes ☐ No
• If Co-op/Condo: Board approval required: ☐ Yes ☐ No; Estimated timeline: [____] days
• Landmark Status: ☐ Not landmarked ☐ Individual landmark ☐ In a historic district (NYC Landmarks Preservation Commission jurisdiction applies)

2.2 Zoning and Use Compliance

New York Practice Note: New York City uses a comprehensive zoning system (NYC Zoning Resolution) that divides the city into residential (R), commercial (C), and manufacturing (M) districts, with numerous overlay districts and special purpose districts. Zoning compliance is critical for commercial tenants. The NYC Department of Buildings (DOB) issues Certificates of Occupancy and enforces zoning use groups. Tenants should verify that the Premises' Certificate of Occupancy permits the intended use before executing a Lease.

• Zoning District: [________________________________]
• Use Group (per NYC ZR): [________________________________]
• Certificate of Occupancy Number: [________________________________]
• Permitted Uses per C of O: [________________________________]
• Special Permits or Variances: ☐ None required ☐ Required: [________________________________]
• Environmental Quality Review (CEQR/SEQRA): ☐ Not applicable ☐ Required: [________________________________]

2.3 Environmental and Building Compliance

• NYC Local Law 97 (Building Emissions): Landlord acknowledges that the Building ☐ is ☐ is not subject to NYC Local Law 97 of 2019, which imposes carbon emissions limits on buildings over 25,000 gross square feet beginning in 2024, with stricter limits in 2030. Allocation of compliance costs: ☐ Landlord ☐ Tenant pro rata ☐ To be negotiated in Lease
• NYC Local Law 87 (Energy Audit/Retro-Commissioning): Building's most recent audit date: [__/__/____]
• NYC Local Law 152 (Gas Piping Inspections): Status: ☐ Compliant ☐ Inspection pending
• Lead Paint / Asbestos: Landlord represents that, to Landlord's actual knowledge: ☐ No asbestos-containing materials present ☐ ACM survey available ☐ Lead paint: [________________________________]
• ADA Compliance: Responsibility allocated as:
• Common areas and building entrance: ☐ Landlord
• Within Premises: ☐ Tenant ☐ Landlord ☐ Shared

3. LEASE TERM AND COMMENCEMENT

• Initial Term: [____] years [____] months
• Anticipated Commencement Date: [__/__/____]
• Rent Commencement Date: [__/__/____] or upon the occurrence of:
• ☐ Delivery of Premises in agreed condition
• ☐ Substantial completion of Landlord Work
• ☐ Issuance of temporary certificate of occupancy (TCO) or letter of no objection from NYC DOB
• ☐ [____] days after delivery, whichever occurs first
• Lease Expiration Date: [__/__/____]
• Early Access / Fixturing Period: [____] days prior to Rent Commencement for Tenant's non-structural fixturing at Tenant's sole cost, with no rent obligation but subject to insurance and compliance with NYC DOB permit requirements

3.1 Delivery and Late Delivery Remedies

• Delivery Condition: ☐ Warm shell ☐ Cold shell ☐ Turn-key ☐ As-is ☐ White-box ☐ Other: [________________________________]
• Outside Delivery Date: [__/__/____]
• Grace Period for Late Delivery: [____] days
• Abatement for Late Delivery: One (1) day of Base Rent abatement for each day of delay beyond the Outside Delivery Date plus grace period
• Tenant Termination Right: If Premises not delivered within [____] days after Outside Delivery Date, Tenant may terminate by written notice
• Landlord's Liability for Delay Damages: ☐ Capped at [____] months' rent ☐ Unlimited ☐ Limited to abatement only

New York Practice Note: Under N.Y. RPL § 223-a, a tenant may recover damages from a landlord who fails to deliver possession at the agreed time. Parties frequently negotiate specific remedies in the lease that supersede the statutory default.

4. BASE RENT

• Rent Escalation Method: ☐ Fixed at [____]% annually ☐ CPI-based (capped at [____]%) ☐ Fair Market Value at intervals ☐ Per schedule above ☐ Other: [________________________________]
• Free Rent Period: [____] months of Base Rent only, commencing on Rent Commencement Date
• Abated Rent Repayment on Default: ☐ Yes, all abated rent becomes immediately due upon uncured default ☐ No

5. ADDITIONAL RENT -- OPERATING EXPENSES, TAXES, AND ESCALATIONS

5.1 Lease Structure

• ☐ Net -- Tenant pays base year escalations for operating expenses and real estate taxes
• ☐ Modified Gross -- Tenant pays increases over Base Year / Expense Stop
• ☐ Full Service Gross -- All expenses included with expense stop at $[____]/RSF
• ☐ Triple Net (NNN) -- Tenant pays pro rata share of all operating expenses, taxes, and insurance
• ☐ Other: [________________________________]

New York Practice Note: Manhattan and outer-borough office leases are typically structured as gross leases with base-year escalations. Retail leases in NYC may use net or percentage-rent structures. The choice of structure significantly affects how operating expense increases, real estate tax escalations, and energy costs are allocated.

5.2 Operating Expense Escalations

• Base Year: Calendar year [____]
• Tenant's Proportionate Share: [____]% (based on [____] RSF / [____] RSF total building)
• Controllable Expense Cap: ☐ Capped at [____]% annual increase over prior year ☐ No cap
• Porter's Wage Escalation (if applicable): ☐ In lieu of operating expense escalation, Tenant pays $[____]/RSF for each $0.01 increase in the porter's wage rate above the base rate of $[____]/hour ☐ Not applicable
• Excluded Expenses: Capital expenditures (except as required by law enacted after commencement, amortized over useful life per GAAP), leasing commissions, Landlord's income taxes, costs of structural or latent defect correction, environmental remediation not caused by Tenant, ground rent, debt service, depreciation, costs of any work performed for specific tenants
• Audit Rights: Tenant may audit Landlord's operating expense books upon [____] days' notice, at Tenant's cost, for the preceding [____] calendar year(s). If overcharges exceed [____]%, Landlord pays Tenant's audit costs

5.3 Real Estate Tax Escalations -- New York-Specific Provisions

New York Practice Note: New York City real estate taxes are among the highest in the nation and represent a significant component of occupancy cost. The NYC Department of Finance assesses property annually. Under N.Y. RPTL Article 7, property owners may challenge assessments through tax certiorari proceedings in Supreme Court. Tax certiorari refunds may take years to resolve and can result in significant credits or charges to tenants. The allocation of tax certiorari refunds and the associated legal costs should be clearly addressed in the Lease.

• Base Year for Real Estate Taxes: Tax year [____]/[____] (NYC tax year runs July 1 to June 30)
• Tenant's Obligation: Proportionate share of increases above Base Year taxes
• Tax Certiorari: ☐ Landlord shall pursue tax certiorari proceedings in good faith ☐ Tenant entitled to proportionate share of any refund net of costs ☐ Tenant may participate in tax certiorari strategy discussions
• BID/Special Assessments: ☐ Included in operating expenses ☐ Excluded ☐ Amortized over [____] years
• Abatement Programs: If Landlord receives ICAP, J-51, or other tax abatement, Tenant shall ☐ receive proportionate benefit during abatement period ☐ not receive benefit ☐ benefit to be negotiated

5.4 NYC Commercial Rent Tax (CRT)

New York Practice Note: Under NYC Admin. Code § 11-704, tenants of commercial premises in Manhattan south of the center line of 96th Street are subject to the NYC Commercial Rent Tax (CRT) at a rate of 3.9% of the base rent where the annualized base rent exceeds the current threshold (as adjusted). The CRT is the Tenant's direct obligation to the NYC Department of Finance. As of 2025, the taxable threshold is $250,000 in annualized rent, with a sliding-scale tax credit for rents between $250,000 and $300,000.

• CRT Applicability: ☐ Premises located in CRT zone (Manhattan south of 96th Street) ☐ Premises not in CRT zone
• CRT Obligation: If applicable, Tenant is solely responsible for filing and paying the CRT
• Landlord Representations: Landlord shall provide information reasonably required for Tenant's CRT filings

5.5 Insurance Costs

• Insurance Pass-Through: Tenant pays proportionate share of Building insurance cost escalations over Base Year
• Tenant's Own Insurance Requirements:
• Commercial General Liability: $[________________________________] per occurrence / $[________________________________] aggregate
• Property Insurance: Replacement cost on Tenant's improvements and personal property
• Workers' Compensation: Statutory limits as required by N.Y. Workers' Comp. Law
• Business Interruption: ☐ Required ☐ Recommended
• Additional Insured: Landlord, Landlord's managing agent, and Landlord's mortgagee
• Waiver of Subrogation: mutual waiver of subrogation

6. TENANT IMPROVEMENTS AND LANDLORD WORK

6.1 Tenant Improvement Allowance

• TI Allowance: $[____]/RSF ($[________________________________] total)
• Allowance Applicability: ☐ Hard costs only ☐ Hard and soft costs ☐ Including FF&E ☐ Including A&E fees ☐ Including DOB filing and permit fees
• Unused Allowance: ☐ Forfeited ☐ Applied to rent ☐ Paid to Tenant (capped at [____]%) ☐ Carried forward for [____] months
• Disbursement Method: ☐ Landlord-funded construction ☐ Direct payment to Tenant's contractor upon lien waivers ☐ Reimbursement upon completion

6.2 Landlord Work

• Scope of Landlord Work: [________________________________]
• Landlord Work Deadline: [__/__/____]
• Plans and Specifications: Landlord to provide within [____] days of LOI execution; Tenant to approve or comment within [____] business days
• Construction Standards: Building standard finishes unless otherwise specified

6.3 NYC Department of Buildings (DOB) Requirements

New York Practice Note: All alterations to commercial premises in New York City require permits from the NYC DOB. Work is classified as Alt-1 (major alteration involving change of use, egress, or occupancy), Alt-2 (multiple work types not involving change of use/egress), or Alt-3 (single work type, minor). Filing responsibility should be clearly allocated.

• DOB Filing Responsibility: ☐ Landlord ☐ Tenant ☐ Shared
• Alteration Agreement: ☐ Landlord requires Tenant to execute an Alteration Agreement governing construction procedures, insurance, contractor requirements, and restoration obligations
• Licensed Expediter: ☐ Required ☐ Recommended; Cost borne by: ☐ Landlord ☐ Tenant
• Asbestos Abatement (if required): ☐ Landlord responsibility ☐ Tenant responsibility ☐ Cost shared
• ACP-5/ACP-7 Filings: ☐ Landlord to provide at Landlord's cost ☐ Tenant to file at Tenant's cost
• Restoration Obligation at Lease Expiration: ☐ Full restoration to original condition ☐ Removal of specialty installations only ☐ No restoration required

6.4 Fire Code and Life Safety

• Landlord responsible for base building fire alarm, sprinkler, and life safety systems
• Tenant responsible for any fire alarm supplementation, additional sprinkler heads, or other upgrades triggered by Tenant's use or improvements
• FDNY requirements (including FDNY Certificate of Fitness for certain operations): ☐ Tenant's responsibility ☐ Landlord to advise

7. PERMITTED USE AND EXCLUSIVITY

7.1 Permitted Use

• Primary Use: [________________________________]
• Ancillary Uses: [________________________________]
• Prohibited Uses: [________________________________]
• Zoning/C of O Verification: Tenant acknowledges responsibility to verify that the Premises' Certificate of Occupancy permits Tenant's intended use and that such use complies with the applicable NYC Zoning Resolution use groups

7.2 Exclusive Use Rights

• ☐ No exclusive use rights
• ☐ Exclusive use granted for: [________________________________]
• Scope: No other tenant in the Building or ☐ Project shall be permitted to [________________________________]
• Existing Tenants: ☐ Carved out from exclusive ☐ Subject to exclusive upon renewal
• Remedies for Violation: ☐ Reduced rent to $[____]/RSF ☐ Percentage rent in lieu of Base Rent ☐ Right to terminate ☐ Injunctive relief ☐ Self-help with offset
• Continuous Operation Requirement: ☐ Tenant must continuously operate to maintain exclusive ☐ No continuous operation requirement

7.3 Co-Tenancy Requirements (Retail/Mixed-Use)

• ☐ No co-tenancy requirements
• ☐ Opening Co-Tenancy:
• Required anchors open and operating: [________________________________]
• Minimum Building/Project occupancy: [____]%
• Remedy if not satisfied: ☐ Reduced rent of $[____]/RSF ☐ Percentage rent only ☐ Termination right after [____] months
• ☐ Operating Co-Tenancy:
• If anchor tenants cease operations for more than [____] consecutive days: [________________________________]
• If occupancy falls below [____]% for more than [____] consecutive days
• Remedy: ☐ Reduced rent for up to [____] months ☐ Right to terminate after [____] months

7.4 Percentage Rent (Retail)

• ☐ No percentage rent
• ☐ Percentage rent applies:
• Breakpoint: Natural ($[________________________________]) or Artificial ($[________________________________])
• Percentage: [____]% of gross sales exceeding breakpoint
• Reporting: ☐ Monthly ☐ Quarterly ☐ Annually
• Excluded Sales: Internet/mail-order originated elsewhere, returns, employee discounts, sales tax collected

7.5 Tenant Mix Provisions

• Landlord covenants to maintain the following tenant mix standards: [________________________________]
• Landlord shall not lease to the following categories without Tenant's consent: [________________________________]

8. RENEWAL OPTIONS

• Number of Renewal Options: [____]
• Renewal Term Length: [____] years each
• Renewal Rental Rate:
• ☐ Fair Market Value (see Section 8.1 below)
• ☐ Fixed escalation of [____]% over the then-current rent
• ☐ CPI-adjusted (capped at [____]%)
• ☐ The greater of FMV or [____]% increase
• ☐ Per schedule: [________________________________]
• Notice Period for Exercise: [____] months prior to expiration
• Conditions to Exercise: ☐ No uncured default ☐ Tenant in occupancy of at least [____]% of Premises ☐ Original named Tenant or permitted assignee only

8.1 Fair Market Value Determination Process

If renewal rent is FMV:

1. Negotiation Period: [____] days after exercise of renewal option
2. Broker/Appraiser Determination: Each party appoints a licensed New York commercial real estate appraiser or broker with at least [____] years' experience in [________________________________] within [____] days. The two appointed individuals select a third within [____] days. Each independently determines FMV within [____] days.
3. Baseball Arbitration: The FMV shall be the average of the two closest determinations
4. Exclusions from FMV: Exclude value of Tenant's improvements paid by Tenant, any sublease premium, and temporary market distortions
5. Floor: Renewal rent shall not be less than [____]% of final-year rent of the then-current term
6. Cost Allocation: Each party pays its own appraiser; third appraiser's fee shared equally

9. EXPANSION AND PREFERENTIAL RIGHTS

• ☐ Right of First Offer (ROFO): Landlord shall notify Tenant of available space before marketing to third parties. Tenant has [____] business days to respond.
• ☐ Right of First Refusal (ROFR): [____] business days to match a bona fide third-party offer
• ☐ Must-Take Expansion: Tenant obligated to take [________________________________] RSF on or about [__/__/____]
• ☐ Contraction Right: Tenant may surrender [________________________________] RSF after Lease Year [____] upon [____] months' notice and payment of [________________________________]

10. SIGNAGE

• Suite Entry: ☐ Building standard ☐ Custom (subject to Landlord and landmark/DOB approval)
• Building Directory: ☐ Included ☐ Digital directory ☐ Not applicable
• Building Exterior/Facade: ☐ Tenant entitled to signage on [________________________________] elevation(s), subject to NYC DOB sign permit, NYC ZR regulations, and Landmarks Preservation Commission approval (if landmark/historic district) ☐ Not available
• Canopy/Awning (Retail): ☐ Permitted, subject to DOT and DOB approvals ☐ Not applicable
• Signage Costs: ☐ Tenant ☐ Landlord ☐ Shared
• Compliance: All signage subject to NYC ZR sign regulations (§ 32-60 et seq.) and any applicable landmark restrictions

11. PARKING AND COMMON AREAS

11.1 Parking

New York Practice Note: In New York City, dedicated parking is limited and often subject to separate licensing or leasing arrangements. In outer boroughs and suburban NY, parking ratios are more common.

• Parking: ☐ Not applicable (NYC) ☐ [____] spaces per 1,000 RSF ([____] total spaces)
• Reserved Spaces: [____] at $[____]/space/month
• Garage/Lot Operator: [________________________________]

11.2 Common Areas

• Loading Dock/Freight Elevator: ☐ Shared access ☐ Dedicated access ☐ Not applicable; Reservation required: ☐ Yes ☐ No
• After-Hours HVAC: $[____] per hour per zone; minimum [____] hours
• Building Hours: Monday-Friday: [____] a.m. to [____] p.m.; Saturday: [____] a.m. to [____] p.m.; Sunday/Holidays: Closed
• 24/7 Access: ☐ Building has 24/7 lobby attendant ☐ Access via key card/FOB ☐ Building closes at [____] p.m.
• Passenger Elevators: [____] serving the Premises floor(s)
• Freight Elevator: ☐ Available ☐ Subject to scheduling ☐ Charges: $[____]/hour
• Telecommunications/Fiber: ☐ Building has fiber connectivity ☐ Tenant may install additional risers ☐ Riser fees: [________________________________]
• Roof Rights: ☐ Tenant may install satellite/antenna equipment on roof ☐ Subject to license agreement ☐ Not available

12. ASSIGNMENT AND SUBLETTING

New York Practice Note: N.Y. RPL § 226-b provides that in any lease for the rental of a residential dwelling, a landlord shall not unreasonably withhold consent to subletting. This statute does not apply to commercial leases, so assignment and subletting rights must be negotiated contractually. N.Y. GOL § 5-321 voids certain exculpatory clauses in leases, which may affect broadly drafted restriction provisions.

• Landlord Consent: Required, not to be unreasonably withheld, conditioned, or delayed
• Permitted Transfers: No consent required for transfers to:
• ☐ Affiliates controlling, controlled by, or under common control with Tenant
• ☐ Successors by merger, consolidation, or reorganization
• ☐ Purchasers of substantially all of Tenant's assets
• Provided the transferee assumes all Lease obligations and has a net worth of at least $[________________________________]
• Recapture Right: ☐ Landlord may recapture ☐ No recapture right
• Profit Sharing: ☐ [____]% of net sublease profit to Landlord after deducting Tenant's reasonable costs ☐ No profit sharing
• Response Time: Landlord to respond within [____] business days

13. SECURITY DEPOSIT AND FINANCIAL ASSURANCES

• Security Deposit: $[________________________________] (equivalent to [____] months' Base Rent)
• Form: ☐ Cash ☐ Letter of credit ☐ Either
• Burn-Down: Reduces to $[________________________________] after Lease Year [____] provided no uncured default
• Return: Within [____] days after Lease expiration and surrender
• Letter of Credit Terms: Evergreen, drawable on sight, from a bank with offices in New York, minimum rating of [________________________________]
• Good-Guy Guaranty: ☐ Yes (see Section 13.1) ☐ Full-term guaranty ☐ Burn-off after [____] years ☐ Not required

13.1 Good-Guy Guaranty

New York Practice Note: The "good-guy guaranty" is a market-standard structure in NYC commercial leasing. The guarantor is personally liable for rent and lease obligations through the date that the tenant vacates and surrenders the premises in broom-clean condition, provided the tenant gives the required advance notice. This structure protects the landlord against "sit and squat" scenarios while giving the guarantor a defined exit.

• Guarantor personally liable for all rent and Lease obligations through the Surrender Date
• Surrender Date: The date Tenant actually vacates and surrenders the Premises in broom-clean condition, free of all occupants, subtenants, and personal property, provided Tenant gives at least [____] months' prior written notice of intent to vacate
• Guarantor released from liability for obligations arising after the Surrender Date (except for obligations that accrued prior to surrender)
• Early Termination Payment: ☐ Tenant must pay [____] months' rent upon surrender ☐ No termination payment
• Conditions to Good-Guy Surrender: ☐ No monetary default at time of surrender ☐ Premises surrendered in compliance with Lease requirements ☐ All Tenant personal property removed

14. INSURANCE AND INDEMNITY

• Tenant's Insurance:
• Commercial General Liability: $[________________________________] per occurrence / $[________________________________] aggregate
• Property Insurance: Replacement cost on Tenant's improvements and personal property
• Workers' Compensation: Statutory limits per N.Y. Workers' Comp. Law
• Business Auto Liability: $[________________________________] combined single limit
• Umbrella/Excess: $[________________________________]
• Additional Insured: Landlord, Landlord's managing agent, and Landlord's mortgagee
• Landlord's Insurance: Property insurance on Building and CGL for common areas
• Mutual Waiver of Subrogation: Required
• Mutual Indemnity: Each party indemnifies the other for claims arising from the indemnifying party's negligence or willful misconduct

New York Practice Note: N.Y. GOL § 5-321 provides that agreements exempting lessors from liability for injuries to persons or property caused by or resulting from the negligence of the lessor, its agents, servants, or employees, in the operation or maintenance of the demised premises or the real property containing the demised premises, are void as against public policy. Lease indemnity provisions must be drafted to comply with this limitation.

15. SUBORDINATION, NON-DISTURBANCE, AND ATTORNMENT (SNDA)

• Landlord shall deliver a commercially reasonable SNDA from each existing mortgagee within [____] days of Lease execution
• SNDA shall provide that Tenant's possession and rights shall not be disturbed so long as Tenant is not in default beyond cure periods
• Tenant shall subordinate to future mortgages provided a commercially reasonable SNDA is delivered
• Estoppel Certificates: Each party shall deliver within [____] business days of request

16. CASUALTY AND CONDEMNATION

16.1 Casualty

• Landlord to notify Tenant of estimated restoration time within [____] days
• Either party may terminate if restoration estimated to exceed [____] days
• Rent abates proportionately during restoration
• Termination right if casualty occurs during last [____] months of term

16.2 Condemnation

• Either party may terminate if all or a material portion taken
• Tenant has independent right to claim for relocation expenses, loss of business goodwill, and unamortized improvements paid by Tenant

17. DEFAULT AND REMEDIES

17.1 Tenant Default

• Monetary Default: Failure to pay within [____] days after written notice
• Non-Monetary Default: Failure to cure within [____] days after written notice (or longer if reasonably needed, provided Tenant commences cure within [____] days and diligently pursues)
• Bankruptcy: Voluntary petition or failure to dismiss involuntary petition within [____] days

New York Practice Note: New York courts strictly construe lease termination and forfeiture provisions. Under N.Y. RPAPL § 753, a commercial tenant served with a notice of petition and petition in a summary proceeding may cure a default and be restored to possession if the court finds the tenant's default was not willful. However, this right is discretionary and does not apply to chronic defaulters. Yellowstone injunctions (from First National Stores, Inc. v. Yellowstone Shopping Center, Inc., 21 N.Y.2d 630 (1968)) allow commercial tenants to obtain a temporary restraining order tolling cure periods pending court determination of whether a default exists.

17.2 Landlord Default

• Failure to perform within [____] days after written notice from Tenant
• Tenant's remedies: ☐ Self-help with right of offset (capped at [____]% of monthly rent) ☐ Rent abatement ☐ Termination after repeated defaults ☐ Suit for damages

18. BINDING AND NON-BINDING PROVISIONS

18.1 Non-Binding Provisions

All provisions of this LOI other than those specified in Section 18.2 are non-binding expressions of the parties' current intent and shall not create any legally enforceable obligations.

18.2 Binding Provisions

The following provisions are legally binding upon execution:

(a) Exclusivity Period. From the date hereof through [__/__/____], Landlord shall not market, show, or negotiate with any other party for the Premises.

(b) Confidentiality. Each party shall maintain the terms of this LOI and all negotiations in confidence, disclosing only to attorneys, accountants, brokers, lenders, and prospective investors.

(c) Brokerage. See Section 19. Indemnification obligations are binding.

(d) Governing Law and Venue. See Section 20.

(e) Expenses. Each party bears its own costs unless otherwise agreed in writing.

19. BROKERS

• Landlord's Broker: [________________________________], License No. [________________________________]
• Tenant's Broker: [________________________________], License No. [________________________________]
• Commission: Per separate agreement between Landlord and Landlord's Broker
• Indemnity: Each party represents no other broker engaged and shall indemnify the other from claims by any other broker

20. GOVERNING LAW AND VENUE

• Governing Law: State of New York, without regard to conflict-of-laws principles
• Venue: State or federal courts located in [________________________________] County, New York (for NYC properties, typically New York County (Manhattan), Kings County (Brooklyn), etc.)
• Jury Waiver: ☐ Waived ☐ Not waived
• Attorney's Fees: ☐ Prevailing party entitled to reasonable attorney's fees ☐ Each party bears its own fees

21. NEGOTIATION TIMELINE

22. ADDITIONAL TERMS AND CONDITIONS

22.1 Environmental

• Landlord represents compliance with CERCLA, RCRA, N.Y. ECL Article 27 (Hazardous Waste), and NYC Local Laws
• Tenant shall not use, store, or dispose of hazardous materials except in de minimis quantities in ordinary course of business
• Landlord to deliver any existing Phase I/Phase II environmental reports within [____] days

22.2 Utilities

• Tenant responsible for: ☐ Electric (direct meter/submeter at ☐ utility rate ☐ Landlord rate of $[____]/RSF) ☐ Gas ☐ Water/sewer ☐ Telecom ☐ Trash removal
• Electric Metering: ☐ Direct meter (Tenant's own Con Edison account) ☐ Submeter (Landlord bills Tenant at utility rate plus [____]% administrative charge per N.Y. PSC regulations) ☐ Rent inclusion (electric included in Base Rent, subject to survey adjustment)

22.3 Holdover

• Holdover rate: [____]% of then-current Base Rent (typically 200% in NYC) plus all Additional Rent, on a month-to-month basis

22.4 Force Majeure

• Delays from acts of God, war, terrorism, pandemic, government action, labor disputes, or material shortages shall extend time for performance (except Tenant's rent obligation)

22.5 Loft Law Considerations (if applicable)

New York Practice Note: If the Premises are in a building subject to NYC Loft Law (N.Y. Mult. Dwell. Law Art. 7-C), additional protections and requirements apply, including potential rent regulation and legalization obligations. Verify Loft Law status before entering into any LOI or Lease.

• Loft Law Status: ☐ Not applicable ☐ Building subject to Loft Law ☐ Under review

23. PRACTICE TIPS FOR NEW YORK MULTI-TENANT COMMERCIAL LEASE LOI

For Tenant's Counsel:
- Loss Factor: Scrutinize the rentable-to-usable ratio. NYC loss factors can range from 15% to 30%+ depending on building age and configuration. Negotiate measurement methodology (REBNY or BOMA standard).
- Commercial Rent Tax: If the Premises are in Manhattan south of 96th Street and annualized rent exceeds the CRT threshold, budget for the 3.9% CRT as a direct tenant obligation.
- Tax Escalations: NYC real estate taxes are a major cost driver. Negotiate tax certiorari participation rights and ensure refunds are passed through net of proportionate costs.
- Local Law 97 Compliance: Understand how Building Emissions limits may affect future operating costs. Negotiate caps or carve-outs for LL97 compliance costs.
- Good-Guy Guaranty: This is market-standard in NYC. Negotiate the notice period, conditions to surrender, and any early termination payment carefully.
- Yellowstone Injunctions: Preserve the right to seek a Yellowstone injunction to toll cure periods in the event of a disputed default.
- DOB Permits: Factor in NYC DOB permitting timelines (often 3-6+ months for Alt-1 filings) when negotiating delivery dates and fixturing periods.
- Alteration Agreement: Review the Landlord's standard alteration agreement early, as it may impose significant restrictions and insurance requirements.

For Landlord's Counsel:
- Non-Binding Language: Use clear, explicit language that the LOI does not create binding obligations (except specified provisions) to comply with N.Y. GOL § 5-703 and avoid inadvertent contract formation.
- Recapture and Profit-Sharing: Standard in NYC to retain recapture rights and share in sublease profits.
- Continuous Operation: If granting exclusive use, require continuous operation as a condition.
- Building Rules and Regulations: Reference building-specific rules (move-in/move-out procedures, freight elevator scheduling, after-hours access protocols) that will be incorporated into the Lease.

SIGNATURES

This LOI is executed as of the date first written above. This LOI is non-binding except as expressly set forth in Section 18.2.

LANDLORD:                                    TENANT:

_______________________________________      _______________________________________
Entity Name                                  Entity Name

By: ____________________________________     By: ____________________________________
Name: __________________________________     Name: __________________________________
Title: _________________________________     Title: _________________________________
Date: [__/__/____]                           Date: [__/__/____]


GUARANTOR (if applicable):

_______________________________________
Guarantor Name

By: ____________________________________
Name: __________________________________
Title: _________________________________
Date: [__/__/____]

SOURCES AND REFERENCES

• N.Y. Real Property Law, Article 7: https://www.nysenate.gov/legislation/laws/RPP/A7
• N.Y. General Obligations Law § 5-703: https://www.nysenate.gov/legislation/laws/GOB/5-703
• N.Y. GOL § 5-321: https://www.nysenate.gov/legislation/laws/GOB/5-321
• NYC Commercial Rent Tax, Admin. Code § 11-704: https://www.nyc.gov/site/finance/taxes/business-commercial-rent-tax.page
• NYC Local Law 97 of 2019 (Building Emissions): https://www.nyc.gov/site/sustainablebuildings/ll97/local-law-97.page
• NYC Zoning Resolution: https://zr.planning.nyc.gov/
• NYC Department of Buildings: https://www.nyc.gov/site/buildings/
• NYC Commercial Leasing Guide (SBS): https://www.nyc.gov/assets/sbs/downloads/pdf/about/reports/commercial-lease-guide-accessible.pdf