Commercial Lease Letter of Intent (Single-Tenant) - Texas

LETTER OF INTENT

SINGLE-TENANT COMMERCIAL LEASE -- STATE OF TEXAS

Date: [__/__/____]

CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY

IMPORTANT NOTICE REGARDING BINDING EFFECT UNDER TEXAS LAW: This Letter of Intent ("LOI") is intended to be non-binding except as expressly stated in Section 20 below. Under Texas law, an LOI may become an enforceable contract if it contains all essential terms and reflects a meeting of the minds, even if the parties contemplate a subsequent formal lease. See John Wood Group USA, Inc. v. ICO, Inc., 26 S.W.3d 12 (Tex. App.--Houston [1st Dist.] 2000). 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: [________________________________], Texas [____]
• County: [________________________________]
• Legal Description: [________________________________] (or per attached Exhibit A)
• Approximate Building Square Footage: [________________________________] RSF
• Land Area: Approximately [________________________________] acres / square feet
• Building Type: ☐ Office ☐ Retail ☐ Industrial/Warehouse ☐ Flex/R&D ☐ Distribution ☐ Other: [____________]
• Year Built / Last Renovated: [________________________________]
• Single-Tenant Structure: ☐ Freestanding building ☐ Ground lease (Tenant constructs improvements) ☐ Build-to-suit (Landlord constructs per Tenant's specifications) ☐ Sale-leaseback

2.1 Property Condition

Texas Practice Note: Texas does not impose an implied warranty of habitability for commercial leases. In Davidow v. Inwood North Professional Group-Phase I, 747 S.W.2d 373 (Tex. 1988), the Texas Supreme Court recognized an implied warranty of suitability in commercial leases, but this warranty can be contractually disclaimed by the parties. In a single-tenant NNN lease, the tenant typically assumes substantially all maintenance and repair obligations, making pre-lease due diligence critical.

• Property Condition Report: ☐ Landlord to provide within [____] days ☐ Tenant to conduct independent inspection within [____] days of LOI execution
• Acceptance: ☐ As-is, where-is (subject to Landlord Work, if any) ☐ Subject to satisfactory inspection
• Environmental: ☐ Phase I ESA provided ☐ Phase I ESA to be obtained by ☐ Landlord ☐ Tenant at ☐ Landlord's ☐ Tenant's ☐ shared cost
• ADA Compliance: ☐ Landlord warrants current ADA/TAS compliance ☐ Tenant accepts existing condition and assumes future ADA/TAS compliance obligations
• Flood Zone: ☐ Not in flood zone ☐ Zone [____] per FEMA Map [________________________________]
• Survey: ☐ Landlord to provide current ALTA/NSPS survey ☐ Tenant to obtain at Tenant's cost

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 construction
• ☐ Issuance of certificate of occupancy
• ☐ [____] days after delivery, whichever occurs first
• Lease Expiration Date: [__/__/____]
• Early Access / Fixturing Period: [____] days prior to Rent Commencement for Tenant's installation of equipment, racking, trade fixtures, and other personal property at no rent obligation

3.1 Delivery and Late Delivery Remedies

• Delivery Condition: ☐ Shell condition ☐ Turn-key per approved plans ☐ As-is ☐ Build-to-suit per Section 6 ☐ Other: [________________________________]
• Outside Delivery Date: [__/__/____]
• Grace Period: [____] days
• Abatement: One (1) day of Base Rent abatement per day of delay beyond Outside Delivery Date plus grace period
• Tenant Termination Right: If not delivered within [____] days after Outside Delivery Date, Tenant may terminate upon written notice, and Landlord shall reimburse Tenant's documented out-of-pocket costs up to $[________________________________]
• Liquidated Damages (if build-to-suit): ☐ $[____] per day after [____] days beyond Outside Delivery Date ☐ 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 commencing on Rent Commencement Date
• Abated Rent Repayment on Default: ☐ Yes ☐ No

5. ADDITIONAL RENT -- NNN STRUCTURE AND OPERATING EXPENSES

5.1 Lease Structure -- Triple Net (NNN) Provisions

Texas Practice Note: Single-tenant commercial leases in Texas are commonly structured as absolute NNN or NNN leases, where the tenant assumes responsibility for all operating costs including real property taxes, insurance, and maintenance. In an absolute NNN (bond-type) lease, the tenant bears virtually all costs and risks associated with the property, similar to ownership. Texas's lack of a state income tax makes property taxes the primary revenue source for local government, resulting in property tax rates among the highest in the nation. This makes clear allocation of property tax obligations and protest rights especially important.

• ☐ Absolute NNN (Bond Lease): Tenant pays all operating expenses, taxes, insurance, and maintenance (including structural and roof) without exception. Rent is payable without offset, deduction, or abatement (except as expressly provided).
• ☐ Triple Net (NNN): Tenant pays all operating expenses, taxes, and insurance. Landlord retains responsibility for structural repairs and roof replacement (with Tenant responsible for roof maintenance).
• ☐ Modified NNN / Double Net (NN): Tenant pays taxes and insurance; Landlord pays for structural maintenance and [________________________________].
• ☐ Modified Gross: Base Rent includes [________________________________]; Tenant pays increases above Base Year.
• ☐ Other: [________________________________]

5.2 Estimated NNN Costs (Year 1)

5.3 Real Property Taxes -- Texas-Specific Provisions

Texas Practice Note: Property tax protest rights are critical in Texas single-tenant leases. Under Tex. Tax Code § 41.413, a tenant who is contractually obligated to reimburse the property owner for property taxes is entitled to protest before the appraisal review board if the owner does not file a protest. Texas property is appraised annually by each county's appraisal district, and values may increase substantially, particularly for newly constructed or recently improved properties.

• Real Property Taxes: Tenant shall pay 100% of real property taxes assessed against the Premises (land and improvements)
• Tax Protest Rights:
• ☐ Landlord shall file tax protests in good faith annually if the assessed value exceeds fair market value
• ☐ Tenant retains independent right to protest under Tex. Tax Code § 41.413
• ☐ Tenant may direct Landlord to engage a tax consultant for protests, with costs borne by ☐ Tenant ☐ Shared
• ☐ Tax protest refunds allocated [____]% to Tenant / [____]% to Landlord after costs
• Newly Constructed Improvements: If Premises include newly constructed improvements, Tenant acknowledges that initial tax assessments may be based on incomplete construction and that subsequent reassessments may significantly increase taxes
• Special Assessments and PID Assessments: ☐ Tenant pays 100% ☐ Excluded from NNN ☐ Amortized over [____] years
• Tax Abatement / Ch. 312 or Ch. 313/328 Agreements: ☐ Landlord holds or will apply for a tax abatement ☐ Tenant receives benefit proportionate to abatement ☐ Not applicable

5.4 Insurance

• Property Insurance: ☐ Tenant procures and pays for all property insurance (including building, improvements, and personal property) at full replacement cost ☐ Landlord procures, Tenant reimburses
• Liability Insurance:
• Commercial General Liability: $[________________________________] per occurrence / $[________________________________] aggregate
• Umbrella/Excess: $[________________________________]
• Workers' Compensation: Statutory limits (Tex. Lab. Code Ch. 406 -- Texas employers may opt out, but Landlord may require coverage)
• Business Auto: $[________________________________]
• Environmental Liability: ☐ Required ☐ Not required
• Additional Insured: Landlord and Landlord's lender
• Waiver of Subrogation: Mutual

5.5 Maintenance, Repairs, and Capital Expenditures

• Capital Expenditure Treatment (if Landlord responsible): Amortized over useful life per GAAP with interest at [____]%, passed through as Additional Rent
• Roof and HVAC Warranty: Landlord shall assign to Tenant any existing manufacturer warranties on roof and HVAC systems
• Management Fee: ☐ [____]% of Base Rent ☐ $[____]/month ☐ Tenant self-manages (no fee)

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

Texas Practice Note: Build-to-suit leases require careful attention to construction timelines, approval processes, and cost allocation. Texas does not require a general contractor's license at the state level, but many municipalities require permits and inspections. The Lease should clearly address who holds the building permits, controls the construction process, and bears the risk of cost overruns.

6.1 Design and Construction

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

If build-to-suit:

• Building Specifications: Per Tenant's specifications to be mutually agreed, including:
• Building size: approximately [________________________________] RSF
• Clear height: [____] feet
• Column spacing: [________________________________]
• Dock doors: [____] (grade-level: [____] / dock-high: [____])
• Power: [____] amps / [____] volts / [____] phase
• HVAC: ☐ Office area only ☐ Full building ☐ Per specifications
• Sprinkler: ☐ ESFR ☐ In-rack ☐ Ordinary hazard ☐ Per Tenant's insurance requirements
• Office finish: approximately [____] RSF ([____]% of total)
• Plans and Specifications: Landlord to prepare and submit for Tenant's approval within [____] days of LOI execution. Tenant to approve or provide comments within [____] business days. Final plans to be mutually approved prior to Lease execution.
• Construction Budget: $[________________________________] ($[____]/RSF)
• Cost Overruns: ☐ Landlord bears all cost overruns ☐ Tenant bears cost overruns attributable to Tenant-requested changes ☐ Overruns above [____]% require Tenant approval
• Contractor Selection: ☐ Landlord selects general contractor ☐ Tenant selects from Landlord-approved list ☐ Competitive bid with [____] contractors
• Construction Timeline: Approximately [____] months from permit issuance
• Substantial Completion Definition: The date on which the Building is substantially complete in accordance with the approved plans, all building systems are operational, a certificate of occupancy (or temporary CO) has been issued, and only minor punch-list items remain

6.2 Tenant's Construction Representative

• Tenant may appoint a construction representative to observe construction progress and attend construction meetings at ☐ weekly ☐ bi-weekly intervals
• Landlord to provide Tenant with monthly construction progress reports

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 permit fees
• Unused Allowance: ☐ Forfeited ☐ Applied to rent ☐ Paid to Tenant (capped at [____]%)
• Disbursement: ☐ Landlord-funded ☐ Direct payment upon lien waivers ☐ Reimbursement

8. PERMITTED USE

• Primary Use: [________________________________]
• Ancillary Uses: [________________________________]
• Prohibited Uses: [________________________________]
• Zoning: Tenant acknowledges responsibility to verify zoning compliance. Current zoning classification: [________________________________]
• Governmental Approvals: ☐ Tenant responsible for obtaining all use permits, occupancy permits, and governmental approvals ☐ Landlord to assist with zoning or variance applications
• Hazardous Materials: ☐ Tenant may use, store, and handle hazardous materials in compliance with all applicable environmental laws (list: [________________________________]) ☐ No hazardous materials permitted except de minimis office quantities

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 [____]% over then-current rent
• ☐ CPI-adjusted (capped at [____]%)
• ☐ The greater of FMV or [____]% increase
• ☐ Per predetermined schedule: [________________________________]
• Notice Period: [____] months prior to expiration
• Conditions: ☐ No uncured default ☐ Tenant in occupancy ☐ Original named Tenant or permitted assignee ☐ Minimum net worth of $[________________________________]

9.1 Fair Market Value Determination

1. Negotiation: [____] days after exercise
2. Broker/Appraiser Process: Each party appoints a licensed Texas commercial real estate broker/appraiser with [____]+ years' experience in [________________________________] County within [____] days; they select a third within [____] days; each determines FMV within [____] days
3. Resolution: Average of two closest values; if all three differ by more than [____]%, middle value controls
4. Exclusions: Tenant-funded improvements, sublease premium, sale-leaseback premium, temporary market anomalies
5. Floor: Not less than [____]% of final-year rent
6. Costs: Each party pays its own; third appraiser shared equally

10. PURCHASE OPTION

Texas Practice Note: Purchase options in commercial leases must comply with the Statute of Frauds (Tex. Bus. & Com. Code § 26.01). The option price or a mechanism for determining the price must be specified with sufficient certainty. Options to purchase are strictly construed and must be exercised in exact compliance with their terms.

• ☐ No purchase option
• ☐ Purchase option granted:
• Exercise Window: Tenant may exercise the option during month [____] through month [____] of the Lease term, by written notice to Landlord
• Purchase Price:
• ☐ Fixed price: $[________________________________]
• ☐ Fair Market Value at time of exercise, determined by appraisal process (see Section 9.1, applied to purchase price)
• ☐ Formula: [________________________________]
• ☐ [____]x annual Base Rent at time of exercise
• Closing Timeline: Closing within [____] days after exercise
• Title: Landlord to convey by general warranty deed, free and clear of all liens and encumbrances except [________________________________]
• Title Insurance: ☐ Landlord pays owner's policy ☐ Tenant pays ☐ Shared
• Survey: ☐ Updated ALTA/NSPS survey at ☐ Landlord's ☐ Tenant's ☐ shared cost
• Due Diligence Period: [____] days after exercise for Tenant's environmental, structural, and title review
• Financing Contingency: ☐ Yes, [____] days ☐ No -- cash or pre-approved financing
• ROFR Alternative: ☐ If Landlord receives a bona fide third-party purchase offer, Tenant has [____] days to match on same terms

11. GROUND LEASE PROVISIONS (IF APPLICABLE)

• ☐ This is a ground lease transaction (complete this section)
• ☐ This is NOT a ground lease (skip to Section 12)

If ground lease:

• Ground Rent: $[____]/acre per year, escalating [____]% every [____] years
• Ground Lease Term: [____] years, with [____] renewal option(s) of [____] years each
• Tenant's Improvements: Tenant shall construct, own, and maintain all improvements at Tenant's sole cost
• Ownership of Improvements: ☐ Tenant owns during term; title reverts to Landlord at expiration ☐ Tenant owns and must remove at expiration ☐ Landlord purchase option at FMV at expiration
• Leasehold Mortgage: ☐ Tenant may encumber leasehold interest ☐ Landlord consent required ☐ Landlord to provide leasehold mortgagee protections (notice of default, opportunity to cure, new lease rights)
• Subordination: ☐ Fee interest subordinated to leasehold mortgage ☐ Fee interest not subordinated
• Property Taxes: ☐ Tenant pays 100% of taxes on land and improvements ☐ Landlord pays land taxes, Tenant pays improvement taxes

12. EXPANSION AND CONTRACTION

• ☐ Expansion Option: Right to expand onto adjacent land/building ([________________________________]) within [____] months of notice at rent of $[____]/RSF
• ☐ Must-Take Expansion: Required expansion of [________________________________] RSF on [__/__/____]
• ☐ Contraction Right: Tenant may surrender approximately [____]% of the Premises after Lease Year [____] upon [____] months' notice and payment of $[________________________________]
• ☐ Early Termination Option: Tenant may terminate the Lease after Lease Year [____] upon [____] months' notice and payment of an early termination fee equal to $[________________________________] (typically unamortized TI, commissions, and free rent)

13. SIGNAGE

• Building Signage: ☐ Tenant has exclusive signage rights on the Building (all elevations)
• Monument/Pylon: ☐ Tenant-exclusive monument sign at property entrance
• Size/Design: Subject to applicable municipal sign ordinance and any deed restrictions
• Costs: ☐ Tenant ☐ Landlord ☐ TI allowance
• Removal at Expiration: ☐ Tenant to remove and restore at Tenant's cost

14. PARKING

• Parking Spaces: [____] total ([____] standard / [____] ADA-accessible / [____] reserved for visitors)
• Parking Ratio: [____] spaces per 1,000 RSF
• Surface/Structured: ☐ Surface lot ☐ Structured parking ☐ Both
• Truck Court / Trailer Parking: ☐ [____] trailer spots ☐ Truck court with [____]-foot apron ☐ Not applicable
• Maintenance: ☐ Tenant (NNN) ☐ Landlord

15. ASSIGNMENT AND SUBLETTING

• 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 $[________________________________] and assumes all Lease obligations
• Recapture Right: ☐ Landlord may recapture ☐ No recapture (critical for single-tenant NNN)
• Profit Sharing: ☐ [____]% to Landlord ☐ No profit sharing
• Release of Original Tenant: ☐ Released upon approved assignment ☐ Remains liable through original term
• 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 Lease Year [____]
• Letter of Credit Terms: Evergreen, drawable on sight, from a bank with offices in Texas
• Guaranty: ☐ Corporate/personal guaranty for full term ☐ Burn-off after [____] years ☐ Capped at $[________________________________] ☐ Not required
• Financial Reporting: Tenant shall provide ☐ annual ☐ quarterly financial statements within [____] days of period end

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 is delivered
• Estoppel Certificates: Each party to deliver within [____] business days of request

18. CASUALTY AND CONDEMNATION

18.1 Casualty

• Landlord to notify Tenant of estimated restoration time within [____] days
• If restoration exceeds [____] days, either party may terminate
• Rent abates proportionately during restoration
• If casualty during last [____] months of term, either party may terminate
• Insurance Proceeds (Absolute NNN): If absolute NNN lease, ☐ Tenant controls restoration using insurance proceeds ☐ Landlord controls restoration

18.2 Condemnation

• Either party may terminate if all or material portion taken
• Tenant has independent right to claim relocation expenses, business goodwill loss, and unamortized Tenant-funded improvements
• Partial Condemnation: If less than [____]% of Building or [____]% of parking taken, Lease continues with proportionate rent reduction

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 after written notice (longer if reasonably needed with diligent pursuit)
• Bankruptcy: Per applicable bankruptcy code provisions

19.2 Landlord Default

• Failure to perform within [____] days after written notice
• Tenant's remedies: ☐ Self-help with offset (capped at [____]% of monthly rent per month, cumulative cap of $[________________________________]) ☐ Rent abatement ☐ Termination after [____] consecutive defaults ☐ Suit for damages

Texas Practice Note: Under Tex. Prop. Code § 93.002, a commercial landlord has a duty to install or reattach security devices at tenant request. Under § 93.012, a landlord who interrupts utility service to prevent tenant access is liable for actual damages, one month's rent or $500 (whichever is greater), and attorney's fees. The Texas DTPA (Tex. Bus. & Com. Code § 17.41 et seq.) may provide remedies for false or misleading representations regarding building condition, but DTPA waivers are enforceable for businesses with assets or revenues exceeding $25 million (§ 17.49(f)).

20. BINDING AND NON-BINDING PROVISIONS

20.1 Non-Binding Provisions

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

20.2 Binding Provisions

The following are binding upon execution:

(a) Exclusivity Period. Through [__/__/____], Landlord shall not market, show, 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 obligations are 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 Tenant and its agents reasonable access to the Premises for inspection, testing, and due diligence purposes upon [____] hours' prior notice. Tenant shall indemnify Landlord for any damage caused during such access and shall carry insurance as reasonably required by Landlord.

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 Texas, without regard to conflict-of-laws principles
• Venue: State or federal courts in [________________________________] County, Texas
• Jury Waiver: ☐ Waived ☐ Not waived
• Attorney's Fees: ☐ Prevailing party entitled to reasonable attorney's fees ☐ Each party bears its own

23. NEGOTIATION TIMELINE

24. ADDITIONAL TERMS AND CONDITIONS

24.1 Environmental

• Landlord represents compliance with CERCLA, RCRA, and Tex. Health & Safety Code Ch. 361
• If Phase I ESA reveals recognized environmental conditions (RECs), Tenant may ☐ terminate this LOI ☐ require Phase II ESA at ☐ Landlord's ☐ Tenant's cost ☐ negotiate environmental indemnity and remediation plan
• Tenant's environmental obligations: [________________________________]

24.2 Utilities

• ☐ All utilities separately metered and paid directly by Tenant
• ☐ Landlord responsible for providing utility infrastructure to the building; Tenant responsible for all utility costs

24.3 Holdover

• Holdover rate: [____]% of then-current Base Rent plus all Additional Rent/NNN charges

24.4 Force Majeure

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

24.5 Quiet Enjoyment

• Landlord covenants that Tenant shall have quiet and peaceful enjoyment of the Premises for the Lease term, subject to the terms of the Lease and any superior mortgages for which an SNDA has been delivered

24.6 Sale-Leaseback Provisions (if applicable)

• ☐ This is a sale-leaseback transaction
• Purchase Price: $[________________________________]
• Closing: Simultaneous with Lease execution on [__/__/____]
• Lease Term: [____] years, commencing on closing date
• Title: Tenant (as seller) to convey by general warranty deed
• Tenant's Right of First Refusal on Resale: ☐ Yes ☐ No

25. PRACTICE TIPS FOR TEXAS SINGLE-TENANT COMMERCIAL LEASE LOI

For Tenant's Counsel:
- NNN Scope: In an absolute NNN lease, Tenant bears virtually all costs. Negotiate clear carve-outs for structural defects existing at commencement, environmental contamination not caused by Tenant, and condemnation/eminent domain.
- Property Tax Protest: Preserve Tenant's right to protest under Tex. Tax Code § 41.413. In a single-tenant building, the entire tax burden falls on Tenant, making protest rights essential.
- Build-to-Suit: If build-to-suit, negotiate a guaranteed maximum price (GMP), detailed specifications, progress milestone reporting, and meaningful delay remedies. Require Landlord to post a completion bond or provide financial assurance.
- Purchase Option: If negotiating a purchase option, ensure the option price or price mechanism is specified with certainty per the Statute of Frauds. Consider fixing the price at a cap rate applied to the then-current NOI.
- Roof and Structure: Even in NNN leases, negotiate a warranty period (typically 1-2 years) during which Landlord is responsible for latent defects in roof and structural elements.
- DTPA Protections: The DTPA may apply to landlord representations regarding property condition. However, DTPA waivers are enforceable for large businesses.
- Environmental Indemnity: In industrial/warehouse uses, negotiate a baseline environmental assessment and mutual indemnity framework.

For Landlord's Counsel:
- Non-Binding Language: Include clear non-binding disclaimers per John Wood Group USA. Avoid language suggesting finality or agreement on all material terms.
- Credit Underwriting: For NNN leases, the tenant's credit is critical. Require financial statements, guaranty, and/or letter of credit.
- Recapture: Consider whether to include recapture rights on assignment/subletting. Many institutional NNN investors require freely assignable leases.
- Go-Dark: In single-tenant retail, address whether Tenant may cease operations (go-dark) while continuing to pay rent. Landlord may require continuous operation or grant a recapture right.
- Subordination: In ground lease or build-to-suit contexts, coordinate the SNDA with the construction lender and any permanent financing.

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

• Texas Property Code, Chapter 93 (Commercial Tenancies): https://statutes.capitol.texas.gov/Docs/PR/htm/PR.93.htm
• Texas Tax Code § 41.413 (Tenant's Right to Appeal Appraisal): https://statutes.capitol.texas.gov/Docs/TX/htm/TX.41.htm
• Davidow v. Inwood North Prof. Group-Phase I, 747 S.W.2d 373 (Tex. 1988): https://law.justia.com/cases/texas/supreme-court/1988/c-6618.html
• John Wood Group USA, Inc. v. ICO, Inc., 26 S.W.3d 12 (Tex. App.--Houston [1st Dist.] 2000)
• Texas Deceptive Trade Practices Act: https://statutes.capitol.texas.gov/Docs/BC/htm/BC.17.htm
• Texas Tax Code, Chapter 42 (Judicial Review): https://statutes.capitol.texas.gov/Docs/TX/htm/TX.42.htm