Possible to negotiate after signing Letter of Intent
Hi, 

My parents just signed a letter of intent without my knowledge and wanted me to take a look at it. I usually have my broker handle the negotiations for me, but they went straight to the listing broker. 

Looks like they signed the Letter of Intent, at the listed rent + a 4% escalation every year. I see a lease negotiation addendum on it with 7 days to review the draft after credit check etc. I'm pretty sure if they had used my broker they could've negotiated a lower base rent. I've never dealt with rent escalation, but I'm assuming that can be negotiated as well.

Just out of curiosity what are the likelihood of negotiating after the landlord accepts the letter?
[{"id": "gv4499h", "text": "What is the LOI for? This will help the rest of us determine if some of the terms set are outlandish or not. Also LOI is just a set of parameters agreed to that helps draft the lease terms. Nothing is set in stone yet from a legal contract standpoint.", "replies": [{"id": "gv45e5v", "text": "Willing to enter a lease agreement with the landlord. Preliminary understanding of general terms and conditions to enter a lease agreement. - I'm hoping thats what you're asking about?\n\nThank you for your comment, I just saw the base rent listed out for every year and just got scared they signed a contract agreeing to that amount.", "replies": [{"id": "gv5b48s", "text": "From what I understand, Typically a letter of intent is a moral contract saying you will more than likely follow through but not legally binding. It\u2019s typically not illegal to back out of a letter of intent but it\u2019s kinda expected of you to stick with said letter. LOT is very different than lease contract, if they signed a lease contract than you\u2019re stuck. \n\nI am not lawyer or giving legal advice of any kind and you should contact a lawyer if you don\u2019t understand something.  this is just my understanding take it as you will.", "replies": [], "depth": 3}, {"id": "gv5mw6h", "text": "Right, but is it an LOI for a retail space, office, industrial lease? The % increases can vary by market depending on the asset leased. For example out here in NJ for Office/ Industrial we will see a typical % increase of 2-3% depending on the deal.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gv45eyu", "text": "Absolutely. An LOI is not binding, just a means of getting on the same page as ownership. You can also bring your broker in (I'd recommend). That listing broker sees an opportunity to get a double commission and will do whatever it takes to make sure they seal the deal.", "replies": [], "depth": 1}, {"id": "gv4dtrg", "text": "An LOI is not legally binding and is used as a guideline for drafting the lease or purchase agreement.  It is common, though something unwise, to amend the terms stipulated in the LOI.  However, it's not uncommon for terms to be adjusted since the LOI only covers the main terms.", "replies": [{"id": "gv5bbx4", "text": "You can completely back out of letter of intent without any repercussions right?", "replies": [{"id": "gv6cg9q", "text": "Yes. Except if you do that often you get a reputation.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gv5mll5", "text": "Talk to the Landlord. If you don't want to be completely transparent, tell him something has changed and you'd like to renogiate the LOI. Worst case scenario he says no and you have the same choice you have now, take the deal or walk away. \n\nI'd prefer this over someone just redlining the rental rate in the lease after an agreeing to them in the LOI and would be more likely to accept and renegotiate.\n\nOr bring your broker in and let them take the blame for renegotiating. I'm sure they'd be happy to do it.", "replies": [], "depth": 1}, {"id": "gv5yh7m", "text": "You must be in Seattle with bumps like that. Also, take that LOI to a lawyer not a broker. That fee will be baked in one way or another.", "replies": [], "depth": 1}, {"id": "gv673ei", "text": "You are re-trading, which happens.  Their brokers representative, if any will lose credibility. If they are not represented, don\u2019t worry about it. Most have gone away from CPI bumps. If we are facing an inflationary environment then 4 pct might be right. 3 pct is rather standard, or if the starting rent was below market then that is another matter.", "replies": [], "depth": 1}, {"id": "gv6ccxm", "text": "Think of a letter of intent to be a contract to sign a contract, except that's not legal so the NOI is 100% unenforceable.\n\nYou draft a letter of intent to do the 99% of work upfront to basically not waste everyone's time and money drafting the long form lease. \n\nNot that the LOI is drafted, the lawyers can work on the wording", "replies": [], "depth": 1}, {"id": "gv8sfc0", "text": "Depends on the working of the LOI, many that I've seen for property purchase are non-binding however you'll want to check with a trusted advisor who can read your document. Reputational risk from a re-trade is, in my opinion, only relevant if you are doing regular transactions like buying or selling assets for a fund or leasing multiple locations.", "replies": [], "depth": 1}, {"id": "gveej65", "text": "LOI's tend to be \"non binding\"...so yes, you can try and renegotiate. Will the other side play ball? You'll find out quickly. \n\nPersonally, if this happened on a deal I was working on, we would more than likely boot you out.", "replies": [], "depth": 1}, {"id": "gwc0bgw", "text": "a letter of intent is non-binding so technically you can still negotiate after the LOI is executed.  With that being said, I don't think the listing agent/owner would appreciate you doing so.", "replies": [], "depth": 1}]