Legal issues with backing out before lease is signed?
My wife and I have been working on opening a salon in a leased commercial space. The process has been on-going for about 8 months, and we still haven’t signed the lease. (The space has never been occupied before, in a new-ish building, and the landlord is not even close to being prepared on their side to allow us to start on design plans with engineers) The more we work with our architect/designer, the more we realize the space might not work for us. We’ve signed a letter of intent that states that the letter is not legally binding to either party, but I’m just wondering if there are any other concerns we should have about backing out of this process. The landlord also installed a demising wall specifically for us, which seemed odd considering there’s been no commitment via lease.
[{"id": "hsxao3q", "text": "No you can back out.", "replies": [], "depth": 1}, {"id": "hsxft9j", "text": "You should trust your intuition and back out. Yes, it sucks for the other side, but you\u2019ll forget about them as soon as you find the right spot. It\u2019s your business and your money on the line. And if the landlord chose to make any improvements prior to having a lease signed, that is not your problem!", "replies": [], "depth": 1}, {"id": "hsxlec2", "text": "In real estate nothing is legal until you\u2019ve put it in writing.", "replies": [{"id": "hsxmlat", "text": "Just wasn\u2019t sure if there are any formalities where they could come after us for leading them on or wasting their own money on legal fees.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hsxpi5c", "text": "Legally no issue. But you'll piss off the owner.", "replies": [{"id": "hsxqo8f", "text": "Oh and i forgot to mention, the owner sold the building and the new owners will be taking over in a few months.", "replies": [{"id": "hsxrloj", "text": "I'd just let the new owners that the space doesn't work for you. The sooner the better. They probably won't mind bc they bought the property with that suite vacant. Don't waste their time.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hsxwsbu", "text": "If you haven\u2019t signed a lease, you\u2019re fine. Tell them you changed your mind and find a different space.", "replies": [], "depth": 1}, {"id": "hsy3lvs", "text": "Pretty common at the LOI stage. I wouldn't worry about it aside from reputation risk with the landlord. You could mitigate that somewhat by being honest and asking if they have anything in their portfolio that better fits your needs.\n\nIf the landlord spent money on a demising wall without a binding lease in place, they were either foolishly optimistic (not your responsibility), or they decided that the space would lease better (to you or another tenant) if demised so they decided to do it regardless of whether you ended up leasing the space.", "replies": [{"id": "hsy3tgy", "text": "Fortunately the landlord does 99% residential, which I think is partly why they sold this building. So it\u2019s unlikely that we cross paths again.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hszqva0", "text": "You can, and should, back out if your needs aren\u2019t being met. LOIs aren\u2019t binding. I\u2019d suggest being very open and honest with landlord in a verbal discussion, for a few reasons: A. You never know if there might be some other solution you haven\u2019t considered that might get brought to light if you announce your intentions, B. It\u2019s better for your reputation to be known as someone who speaks their mind, and C. It\u2019s just the right thing to do. Don\u2019t fall prey to any pressure trapped responses from landlord though.", "replies": [], "depth": 1}, {"id": "ht35asm", "text": "Typically, a letter of intent is not legally binding. Speak to your attorney before you do anything else.", "replies": [], "depth": 1}]