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

LETTER OF INTENT

SINGLE-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 20 below. Under the New York Statute of Frauds (N.Y. GOL § 5-703), any lease for real property exceeding one year must be in writing and signed by the party to be charged. New York courts have held that an LOI may be enforceable as a binding contract if it contains all material terms and reflects the parties' intent to be bound, even where a more formal agreement is contemplated. Courts examine the totality of circumstances, including language used, negotiation context, and whether material terms remain open. 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

• Property Address: [________________________________], New York [____]
• Borough/County: [________________________________]
• Block and Lot: Block [____], Lot [____]
• Approximate Building Square Footage: [________________________________] RSF
• Land Area: Approximately [________________________________] square feet
• Building Type: ☐ Office ☐ Retail ☐ Industrial/Warehouse ☐ Flex/R&D ☐ Distribution ☐ Mixed-Use ☐ Other: [____________]
• Year Built / Last Renovated: [________________________________]
• Single-Tenant Structure: ☐ Freestanding building ☐ Ground lease ☐ Build-to-suit ☐ Sale-leaseback

2.1 Building Ownership and Zoning

New York Practice Note: In New York City, verify the Certificate of Occupancy, zoning use group, and any applicable special district or overlay requirements before committing to a single-tenant lease. The NYC Zoning Resolution divides the City into R (residential), C (commercial), and M (manufacturing) districts, with numerous special districts. Buildings in M zones may have specific use restrictions that affect industrial, warehouse, or distribution tenants. Outside NYC, verify local zoning compliance with the applicable municipal code.

• Ownership Structure: ☐ Fee simple ☐ Condominium unit ☐ Ground lease (expiration: [__/__/____]) ☐ Co-op
• Zoning District: [________________________________]
• Use Group (per NYC ZR, if applicable): [________________________________]
• Certificate of Occupancy Number: [________________________________]
• Permitted Uses per C of O: [________________________________]
• Special Permits/Variances Required: ☐ None ☐ Required: [________________________________]
• Landmark Status: ☐ Not landmarked ☐ Individual landmark ☐ In a historic district
• CEQR/SEQRA Review: ☐ Not applicable ☐ Required

2.2 Environmental and Building Compliance

• NYC Local Law 97 (Building Emissions): Building ☐ is ☐ is not subject to LL97. For single-tenant buildings over 25,000 GSF, the tenant in a NNN lease may bear primary responsibility for emissions compliance and penalties. Allocation: ☐ Tenant ☐ Landlord ☐ To be negotiated
• NYC Local Law 87 (Energy Audit): Most recent audit: [__/__/____]
• NYC Local Law 152 (Gas Piping): ☐ Compliant ☐ Inspection pending
• Lead Paint/Asbestos: ☐ No ACM present ☐ ACM survey available ☐ Lead paint: [________________________________]
• Phase I ESA: ☐ Provided by Landlord ☐ To be obtained by ☐ Landlord ☐ Tenant at ☐ Landlord's ☐ Tenant's cost
• ADA Compliance: ☐ Landlord warrants current ADA compliance ☐ Tenant assumes ADA compliance obligations
• Flood Zone: ☐ Not in flood zone ☐ Zone [____] per FEMA Map [________________________________]

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 / build-to-suit
• ☐ Issuance of 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 installation of equipment, trade fixtures, and personal property (subject to insurance and DOB permit requirements)

3.1 Delivery and Late Delivery Remedies

New York Practice Note: Under N.Y. RPL § 223-a, a tenant may recover damages from a landlord who fails to deliver possession. However, parties commonly negotiate specific delivery remedies that supersede the statutory default.

• Delivery Condition: ☐ Shell ☐ Turn-key per specifications ☐ As-is ☐ Build-to-suit per Section 6 ☐ Other: [________________________________]
• Outside Delivery Date: [__/__/____]
• Grace Period: [____] days
• Abatement: One (1) day of Base Rent per day of delay beyond Outside Delivery Date plus grace
• Tenant Termination Right: If not delivered within [____] days after Outside Delivery Date, Tenant may terminate and receive reimbursement of documented costs up to $[________________________________]
• Liquidated Damages (build-to-suit): ☐ $[____] per day after [____] days ☐ Not applicable

4. BASE RENT

• Rent Escalation Method: ☐ Fixed at [____]% annually ☐ CPI-based (capped at [____]%) ☐ Fair Market Value at intervals ☐ Other: [________________________________]
• Free Rent Period: [____] months of Base Rent
• Abated Rent Repayment on Default: ☐ Yes ☐ No

5. ADDITIONAL RENT -- NNN STRUCTURE AND OPERATING EXPENSES

5.1 Lease Structure

New York Practice Note: Single-tenant leases in New York City are less common than in suburban or industrial markets, but they do occur particularly in outer-borough industrial areas, standalone retail, and suburban office parks. Outside NYC, NNN leases follow patterns similar to other states. Within NYC, even single-tenant buildings involve unique considerations including NYC Local Law compliance, DOB oversight, and the Commercial Rent Tax.

• ☐ Absolute NNN (Bond Lease): Tenant pays all costs without exception
• ☐ Triple Net (NNN): Tenant pays all operating expenses, taxes, insurance; Landlord responsible for structural repairs/roof replacement
• ☐ Modified NNN / Double Net (NN): Tenant pays taxes and insurance; Landlord pays structural and [________________________________]
• ☐ Modified Gross: Base Rent includes [________________________________]; Tenant pays increases
• ☐ Other: [________________________________]

5.2 Estimated NNN Costs (Year 1)

5.3 Real Estate Taxes -- New York-Specific Provisions

New York Practice Note: New York real estate taxes are among the highest in the nation. NYC property is classified into four tax classes; commercial property falls into Class 4 (all other real property not classified as Class 1, 2, or 3) with an effective tax rate that can exceed 10% of assessed value. Outside NYC, rates vary by county and municipality. Under N.Y. RPTL Article 7, property owners may challenge assessments through tax certiorari proceedings in Supreme Court. For single-tenant NNN leases, tax certiorari strategy and refund allocation are critical.

• Real Estate Taxes: Tenant pays 100% of real estate taxes assessed against the Premises
• Tax Year: NYC tax year runs July 1 to June 30; outside NYC, varies by municipality
• Tax Certiorari:
• ☐ Landlord shall pursue tax certiorari in good faith
• ☐ Tenant may direct Landlord to file certiorari proceedings
• ☐ Tenant entitled to 100% of refund net of legal costs (since Tenant pays 100% of taxes)
• ☐ Tax certiorari counsel selected by ☐ Landlord ☐ Tenant ☐ mutual agreement
• ICAP / Tax Abatement: ☐ Property benefits from ICAP or other NYC tax abatement program ☐ Tenant receives full benefit ☐ Not applicable
• BID/Special Assessments: ☐ Tenant pays 100% ☐ Excluded from NNN

5.4 NYC Commercial Rent Tax (CRT)

New York Practice Note: The NYC Commercial Rent Tax (NYC Admin. Code § 11-704) applies to tenants of commercial premises in Manhattan south of 96th Street where annualized base rent exceeds the current threshold ($250,000 as of 2025, with a sliding-scale credit for rents between $250,000 and $300,000). The CRT is the Tenant's direct tax obligation to the NYC Department of Finance and is not passed through by Landlord.

• CRT Applicability: ☐ Premises in CRT zone (Manhattan south of 96th Street) ☐ Not in CRT zone ☐ Not applicable (outside NYC)
• CRT Obligation: If applicable, Tenant solely responsible for CRT filing and payment
• Landlord Information: Landlord shall provide information reasonably required for CRT filings

5.5 Insurance

• Property Insurance: ☐ Tenant procures and pays at full replacement cost (including building if absolute NNN) ☐ Landlord procures, Tenant reimburses
• Liability Insurance:
• CGL: $[________________________________] per occurrence / $[________________________________] aggregate
• Umbrella/Excess: $[________________________________]
• Workers' Compensation: Statutory limits per N.Y. Workers' Comp. Law
• Business Auto: $[________________________________]
• Environmental Liability: ☐ Required ☐ Not required
• Additional Insured: Landlord and Landlord's lender
• Waiver of Subrogation: Mutual

5.6 Maintenance, Repairs, and Capital Expenditures

• NYC Facade Inspection (Local Law 11/FISP): If the Building is 6+ stories, periodic facade inspections are required under the Facade Inspection & Safety Program (FISP). Responsibility: ☐ Tenant (if absolute NNN) ☐ Landlord
• Capital Expenditures (if Landlord responsible): Amortized over useful life per GAAP with interest at [____]%
• Management Fee: ☐ [____]% of Base Rent ☐ $[____]/month ☐ Tenant self-manages

6. BUILD-TO-SUIT PROVISIONS (IF APPLICABLE)

• ☐ This is a build-to-suit (complete this section)
• ☐ Not a build-to-suit (skip to Section 7)

If build-to-suit:

• Building Specifications:
• Size: approximately [________________________________] RSF
• Clear height: [____] feet
• Column spacing: [________________________________]
• Loading: [____] dock doors / [____] grade-level doors
• Power: [____] amps / [____] volts / [____] phase
• HVAC: ☐ Office only ☐ Full building ☐ Per specifications
• Fire suppression: ☐ ESFR ☐ In-rack ☐ Ordinary hazard
• Office: approximately [____] RSF
• Plans and Specifications: Landlord to prepare within [____] days; Tenant to approve within [____] business days
• Construction Budget: $[________________________________] ($[____]/RSF)
• Cost Overruns: ☐ Landlord bears all ☐ Tenant bears change-order costs ☐ Overruns above [____]% require Tenant approval
• NYC DOB Permits: ☐ Landlord responsible for all DOB filings and permits ☐ Shared responsibility
• Construction Timeline: Approximately [____] months from permit issuance
• Substantial Completion: Building substantially complete per approved plans, systems operational, TCO or full CO issued, punch-list items remaining only

6.1 NYC-Specific Construction Requirements

• Alteration Type: ☐ New Building ☐ Alt-1 (major) ☐ Alt-2 (multiple work types) ☐ Alt-3 (minor)
• Environmental Review: ☐ CEQR/SEQRA required ☐ Not required
• Prevailing Wage: ☐ Required (if public subsidy involved) ☐ Not required
• NYC Building Code Compliance: All construction must comply with NYC Building Code (2022 edition or current)
• FDNY Requirements: Fire alarm, sprinkler, and standpipe systems subject to FDNY review and approval
• Asbestos/Lead Abatement (if renovation): ☐ Required, at ☐ Landlord's ☐ Tenant's cost ☐ Not applicable

7. TENANT IMPROVEMENTS (IF NOT BUILD-TO-SUIT)

• TI Allowance: $[____]/RSF ($[________________________________] total)
• Allowance Applicability: ☐ Hard costs ☐ Hard and soft costs ☐ Including FF&E ☐ Including A&E and DOB filing/permit fees
• Unused Allowance: ☐ Forfeited ☐ Applied to rent ☐ Paid to Tenant (capped at [____]%)
• Disbursement: ☐ Landlord-funded ☐ Direct payment upon lien waivers ☐ Reimbursement
• Alteration Agreement: ☐ Required ☐ Not required
• DOB Filing: ☐ Tenant files at Tenant's cost ☐ Landlord files at Tenant's cost
• Restoration at Expiration: ☐ Full restoration ☐ Specialty items only ☐ No restoration

8. PERMITTED USE

• Primary Use: [________________________________]
• Ancillary Uses: [________________________________]
• Prohibited Uses: [________________________________]
• Zoning/C of O Verification: Tenant to verify that Certificate of Occupancy and zoning permit intended use
• Governmental Approvals: ☐ Tenant responsible for all use permits and DOB/DOH/SLA approvals ☐ Landlord to assist
• Hazardous Materials: ☐ Permitted per applicable law (list: [________________________________]) ☐ De minimis only

9. RENEWAL OPTIONS

• Number of Renewal Options: [____]
• Renewal Term Length: [____] years each
• Renewal Rental Rate:
• ☐ Fair Market Value (see Section 9.1)
• ☐ Fixed escalation of [____]%
• ☐ CPI-adjusted (capped at [____]%)
• ☐ Greater of FMV or [____]%
• ☐ Predetermined schedule: [________________________________]
• Notice Period: [____] months prior to expiration
• Conditions: ☐ No uncured default ☐ Tenant in occupancy ☐ Original Tenant or permitted assignee

9.1 Fair Market Value Determination

1. Negotiation: [____] days after exercise
2. Appraiser Process: Each party appoints a New York-licensed appraiser with [____]+ years' experience within [____] days; they select a third within [____] days; each determines FMV within [____] days
3. Resolution: Average of two closest values
4. Exclusions: Tenant-funded improvements, sublease premium, temporary distortions
5. Floor: Not less than [____]% of final-year rent
6. Costs: Each party pays its own; third appraiser shared

10. PURCHASE OPTION

• ☐ No purchase option
• ☐ Purchase option granted:
• Exercise Window: Month [____] through month [____] of Lease term
• Purchase Price:
• ☐ Fixed: $[________________________________]
• ☐ FMV by appraisal
• ☐ Formula: [________________________________]
• ☐ Cap rate of [____]% applied to trailing 12-month NOI
• Closing: Within [____] days after exercise
• Title: General warranty deed, free of liens except [________________________________]
• Title Insurance: ☐ Landlord ☐ Tenant ☐ Shared
• Survey: ☐ Updated ALTA/NSPS at ☐ Landlord's ☐ Tenant's cost
• NYC/NY Transfer Taxes: NYC real property transfer tax (RPTT) of 1% (up to $500K) or 1.425% (over $500K), plus NYS transfer tax of $2 per $500 of consideration (or 0.4%) plus the supplemental "mansion tax" on commercial properties over $2M. Allocation: ☐ Seller/Landlord ☐ Buyer/Tenant ☐ Per market custom (typically seller pays NYS, seller pays NYC RPTT)
• Due Diligence: [____] days for environmental, structural, title review
• Financing Contingency: ☐ Yes, [____] days ☐ No
• ROFR Alternative: ☐ If Landlord receives third-party offer, Tenant has [____] days to match

11. GROUND LEASE PROVISIONS (IF APPLICABLE)

• ☐ Ground lease (complete this section)
• ☐ Not a ground lease (skip to Section 12)

If ground lease:

• Ground Rent: $[____]/SF of land per year, escalating [____]% every [____] years
• Ground Lease Term: [____] years, plus [____] renewal(s) of [____] years
• Tenant's Improvements: Tenant constructs, owns, and maintains all improvements
• Ownership at Expiration: ☐ Title reverts to Landlord ☐ Tenant must remove ☐ Landlord purchases at FMV
• Leasehold Mortgage: ☐ Permitted ☐ Subject to Landlord consent ☐ Landlord to provide mortgagee protections
• Subordination: ☐ Fee subordinated ☐ Fee not subordinated
• NYC Considerations: Ground leases of NYC property may be subject to RPTT on the creation or transfer of leasehold interests. Verify with NYC Department of Finance.

12. EXPANSION, CONTRACTION, AND EARLY TERMINATION

• ☐ Expansion Option: Right to expand into [________________________________] at $[____]/RSF within [____] months of notice
• ☐ Contraction Right: Surrender [____]% of Premises after Year [____] with [____] months' notice and payment of $[________________________________]
• ☐ Early Termination Option: Terminate after Year [____] with [____] months' notice and termination fee of $[________________________________]

13. SIGNAGE

• Building Signage: ☐ Tenant has exclusive signage rights on all elevations
• Monument/Freestanding Sign: ☐ Permitted, subject to ☐ municipal sign code ☐ NYC DOB/ZR sign regulations ☐ LPC approval (if landmarked)
• Canopy/Awning (retail): ☐ Permitted (DOT/DOB approvals required in NYC)
• Costs: ☐ Tenant ☐ Landlord
• Removal: Tenant to remove at expiration

14. PARKING

• Parking Spaces: [____] total
• Surface/Structured: ☐ Surface ☐ Garage ☐ Both
• Truck Court/Loading: ☐ [____] loading docks ☐ Truck court ☐ Not applicable
• NYC Parking: ☐ On-site parking available ☐ Off-site parking arrangement ☐ Not applicable (common in NYC)
• Maintenance: ☐ Tenant (NNN) ☐ Landlord

15. ASSIGNMENT AND SUBLETTING

New York Practice Note: Unlike residential leases (governed by N.Y. RPL § 226-b), commercial lease assignment and subletting rights are entirely contractual. For single-tenant NNN leases, free assignability is often critical for the tenant's exit strategy and for institutional investors.

• Landlord Consent: Required, not to be unreasonably withheld, conditioned, or delayed
• Permitted Transfers: No consent required for:
• ☐ Affiliates
• ☐ Successors by merger or consolidation
• ☐ Purchasers of substantially all assets
• Provided transferee has net worth of at least $[________________________________]
• Recapture Right: ☐ Yes ☐ No
• Profit Sharing: ☐ [____]% to Landlord ☐ No profit sharing
• Release of Original Tenant: ☐ Released upon approved assignment ☐ Remains liable
• Response Time: [____] business days

16. SECURITY DEPOSIT AND FINANCIAL ASSURANCES

• Security Deposit: $[________________________________] ([____] months' Base Rent)
• Form: ☐ Cash ☐ Letter of credit ☐ Either
• Burn-Down: Reduces to $[________________________________] after Year [____]
• Letter of Credit: Evergreen, drawable on sight, from a bank with New York offices
• Good-Guy Guaranty: ☐ Yes (see Section 16.1) ☐ Full-term guaranty ☐ Burn-off after [____] years ☐ Not required

16.1 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 the tenant vacates and surrenders the premises in broom-clean condition, provided advance written notice is given. This protects the landlord against holdover scenarios while giving the guarantor a defined exit.

• Guarantor liable through the Surrender Date (the date Tenant vacates and surrenders in broom-clean condition, free of occupants and personal property, with [____] months' prior written notice)
• Released from post-surrender obligations (except those accrued prior to surrender)
• Early Termination Payment: ☐ [____] months' rent due upon surrender ☐ No payment
• Conditions: ☐ No monetary default at surrender ☐ Premises surrendered per Lease requirements

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

• Landlord to deliver SNDA from existing lender(s) within [____] days of Lease execution
• SNDA to protect Tenant's possession so long as not in default beyond cure periods
• Tenant to subordinate to future mortgages provided SNDA delivered
• Estoppel Certificates: Within [____] business days of request

18. CASUALTY AND CONDEMNATION

18.1 Casualty

• Landlord to notify Tenant of estimated restoration within [____] days
• Either party may terminate if restoration exceeds [____] days
• Rent abates proportionately during restoration
• Termination right if casualty during last [____] months of term
• Insurance Proceeds (Absolute NNN): ☐ Tenant controls restoration ☐ Landlord controls

18.2 Condemnation

• Either party may terminate if all or material portion taken
• Tenant has independent right to claim relocation expenses, business goodwill, and unamortized improvements
• Partial condemnation: Lease continues with rent reduction if less than [____]% taken

19. DEFAULT AND REMEDIES

19.1 Tenant Default

• Monetary Default: Failure to pay within [____] days after written notice
• Non-Monetary Default: Failure to cure within [____] days (or longer if reasonably needed)
• Bankruptcy: Per applicable bankruptcy code

New York Practice Note: New York courts strictly construe lease termination provisions. Under N.Y. RPAPL § 753, a commercial tenant may be restored to possession after default if the court finds the default was not willful. Yellowstone injunctions (First National Stores, Inc. v. Yellowstone Shopping Center, Inc., 21 N.Y.2d 630 (1968)) permit commercial tenants to obtain a temporary restraining order tolling cure periods while the court determines whether a default exists.

19.2 Landlord Default

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

New York Practice Note: N.Y. GOL § 5-321 voids lease provisions exempting lessors from liability for injuries to persons or property caused by the lessor's negligence. Lease indemnity and exculpation provisions must be drafted in compliance with this limitation.

20. BINDING AND NON-BINDING PROVISIONS

20.1 Non-Binding Provisions

All provisions other than Section 20.2 are non-binding. Neither party shall have liability for failure to negotiate or execute a Lease.

20.2 Binding Provisions

The following are binding upon execution:

(a) Exclusivity Period. Through [__/__/____], Landlord shall not market or negotiate with others for the Premises.

(b) Confidentiality. Terms confidential except to attorneys, accountants, brokers, lenders, and investors.

(c) Brokerage. See Section 21. Indemnification is binding.

(d) Governing Law and Venue. See Section 22.

(e) Expenses. Each party bears its own costs.

(f) Due Diligence Access. During the Exclusivity Period, Landlord shall provide reasonable access for inspection and testing upon [____] hours' notice. Tenant shall indemnify Landlord for any damage and maintain insurance.

21. BROKERS

• Landlord's Broker: [________________________________], License No. [________________________________]
• Tenant's Broker: [________________________________], License No. [________________________________]
• Commission: Per separate agreement
• Indemnity: Each party represents no other broker engaged and indemnifies the other

22. GOVERNING LAW AND VENUE

• Governing Law: State of New York, without regard to conflict-of-laws
• Venue: State or federal courts in [________________________________] County, New York
• Jury Waiver: ☐ Waived ☐ Not waived
• Attorney's Fees: ☐ Prevailing party ☐ Each party bears its own

23. NEGOTIATION TIMELINE

24. ADDITIONAL TERMS AND CONDITIONS

24.1 Environmental

• Landlord represents compliance with CERCLA, RCRA, N.Y. ECL Art. 27, and NYC Local Laws
• If Phase I reveals RECs: ☐ Terminate LOI ☐ Require Phase II ☐ Negotiate remediation plan
• Tenant environmental obligations: [________________________________]

24.2 Utilities

• ☐ All utilities separately metered and paid by Tenant
• Electricity: ☐ Direct meter (Con Edison/PSEG) ☐ Submeter (at utility rate plus [____]% per PSC regulations)
• Gas/Steam (if applicable): ☐ Direct account ☐ Landlord provides, Tenant reimburses

24.3 Mechanic's Liens

New York Practice Note: Under N.Y. Lien Law Article 2, contractors may file mechanic's liens against the property (including the landlord's interest) for work performed on behalf of the tenant. Landlord should require Tenant to bond off liens promptly and consider filing a notice of non-responsibility.

• Tenant shall bond off or discharge any mechanic's lien within [____] days of filing

24.4 Holdover

• Holdover rate: [____]% of then-current Base Rent (typically 200% in NYC) plus all Additional Rent

24.5 Force Majeure

• Standard provisions; does not excuse Tenant's rent obligation

24.6 Sale-Leaseback (if applicable)

• ☐ Sale-leaseback transaction
• Purchase Price: $[________________________________]
• NYC/NYS Transfer Taxes: Per Section 10 above
• Closing: Simultaneous with Lease execution on [__/__/____]
• Tenant's ROFR on Resale: ☐ Yes ☐ No

25. PRACTICE TIPS FOR NEW YORK SINGLE-TENANT COMMERCIAL LEASE LOI

For Tenant's Counsel:
- Local Law 97 Compliance: In a single-tenant NNN lease, the tenant may bear responsibility for building emissions compliance. Understand the building's current emissions profile and projected compliance costs for both the 2024 and 2030 limits.
- Tax Certiorari: Since Tenant bears 100% of real estate taxes, negotiate control over tax certiorari strategy and 100% of refunds.
- CRT: If in Manhattan south of 96th Street, budget for the 3.9% Commercial Rent Tax as a direct Tenant obligation.
- Facade Inspection (FISP/LL11): For buildings 6+ stories, periodic facade inspections cost $50,000-$500,000+. Clarify responsibility in NNN leases.
- Yellowstone Rights: Preserve the right to seek a Yellowstone injunction. Do not agree to waive this right.
- Mechanic's Liens: Understand N.Y. Lien Law exposure and require appropriate lien waivers from contractors.
- Good-Guy Guaranty: Standard in NYC. Negotiate reasonable notice period and surrender conditions.
- Transfer Taxes: If a purchase option is included, understand the combined NYC RPTT and NYS transfer tax burden (can exceed 2.5% combined).

For Landlord's Counsel:
- Non-Binding Language: Clear non-binding disclaimers per N.Y. GOL § 5-703.
- Credit Underwriting: NNN leases are credit-dependent. Require financial statements, guaranty, and/or LC.
- LL97 Risk Allocation: If Landlord retains any LL97 exposure, cap the liability or require Tenant to install energy-efficient systems.
- Lien Protection: File notice of non-responsibility; require Tenant to post a bond before commencing any construction.
- Building Code Compliance: Allocate NYC Local Law compliance costs (LL87 energy audits, LL152 gas piping, FISP facade inspections) clearly in the NNN structure.

SIGNATURES

This LOI is executed as of the date first written above. This LOI is non-binding except as expressly set forth in Section 20.2.

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. GOL § 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: https://www.nyc.gov/site/finance/taxes/business-commercial-rent-tax.page
• NYC Local Law 97: https://www.nyc.gov/site/sustainablebuildings/ll97/local-law-97.page
• NYC Zoning Resolution: https://zr.planning.nyc.gov/
• NYC DOB: https://www.nyc.gov/site/buildings/
• N.Y. Lien Law: https://www.nysenate.gov/legislation/laws/LIE
• First National Stores, Inc. v. Yellowstone Shopping Center, Inc., 21 N.Y.2d 630 (1968) (Yellowstone injunctions)
• N.Y. RPAPL § 753 (Commercial tenant cure rights)