Last updated: November 2026
A letter of intent, or LOI, is a short document that lays out the main terms of a commercial lease or purchase before anyone pays an attorney to draft the full contract. It covers price or rent, term, contingencies and key conditions. Most LOIs are non-binding on deal terms, but some provisions can be binding, so read them carefully.
In commercial deals, the LOI is where most of the negotiation happens. Here's what goes into one and how to use it.
This guide is part of our guide to buying or leasing commercial property in Myrtle Beach.
In this guide:
- Why do commercial deals use an LOI?
- What goes in a lease LOI?
- What goes in a purchase LOI?
- Is an LOI binding?
- How do you negotiate with an LOI?
- What mistakes do people make with an LOI?
- Should an attorney review the LOI?
- What terms should you know?
- What happens after the LOI is signed?
- What else do people ask about this?
- Ready to talk about commercial space on the Grand Strand?
Why do commercial deals use an LOI?
An LOI gets both sides to agree on the big picture before the paperwork. Drafting a full lease or purchase contract takes time and legal fees. An LOI confirms you're aligned on the main terms first, so you don't spend money on a contract that falls apart over something basic.
It also becomes the roadmap for the attorneys. Terms you leave out of the LOI are harder to win later.
What goes in a lease LOI?
A lease LOI usually covers:
- The space and its square footage.
- Base rent, rent increases and the lease type.
- The lease term and start date, plus any free-rent period.
- Renewal options.
- Tenant improvement money and who does the work.
- Your permitted use and any exclusive.
- Signage rights.
- Security deposit and personal guaranty.
- Contingencies, like zoning approval or permits.
See how tenant improvement money works.
What goes in a purchase LOI?
A purchase LOI usually covers:
- Price and earnest money.
- The length of the due diligence period.
- Financing contingency and timeline.
- Closing date.
- What documents the seller will provide, like leases, rent rolls, surveys and environmental reports.
- Any existing tenants and how their leases carry over.
Read what due diligence is and how long to ask for.
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Is an LOI binding?
Usually the business terms are non-binding, but some clauses may be binding. Many LOIs state that neither side is bound to the deal until a final contract is signed. At the same time, provisions like confidentiality, exclusivity (the seller agreeing not to negotiate with others for a period), or who pays costs may be written to be binding.
How an LOI is worded matters. Have your attorney review it if it includes binding provisions or if you're unsure.
How do you negotiate with an LOI?
Ask for what matters most to you in the LOI, not later. If you need zoning approval, a long due diligence period, a particular sign or a renewal option, put it in now. Landlords and sellers tend to treat the LOI as the deal, and reopening terms later can sour things.
It's normal for LOIs to go back and forth a few times. Keep track of each version.
What mistakes do people make with an LOI?
The biggest mistake is treating it as a formality. If the LOI is vague on who pays for build-out, how operating costs work or what contingencies apply, those questions get decided later, often in the other side's favor.
Other mistakes include leaving out the use clause, forgetting signage, not addressing the personal guaranty, agreeing to a short due diligence period without checking how long reports take, and signing an exclusivity clause without understanding it. Keep the LOI short, but make sure it covers every term that matters to your business.
Finally, track the expiration date. Many LOIs say the offer lapses if not signed by a certain date.
Talk to Our Team About Commercial Space
Should an attorney review the LOI?
It's a good idea, especially for larger deals or when binding terms are included. An attorney can make sure the non-binding language is clear and that any binding provisions say what you intend. It's also easier for your attorney to draft or review the final contract when they've seen the LOI from the start.
What terms should you know?
- Non-binding: Language stating neither side is committed to the deal until a final contract is signed.
- Exclusivity or no-shop: A clause where the seller or landlord agrees not to negotiate with others for a set period.
- Use clause: The part of a lease that defines what business you can operate in the space.
- Work letter: A lease exhibit that sets out how build-out and the improvement allowance work.
What happens after the LOI is signed?
The attorneys draft the lease or purchase contract. For a lease, the landlord's attorney often drafts first. For a purchase, it varies. Your attorney reviews it against the LOI and negotiates the legal terms.
Due diligence usually starts when the purchase contract is signed, not when the LOI is. Plan your inspections and reports accordingly.
Related guides:
- What Is Due Diligence on a Commercial Property, and How Long Should I Ask For in Myrtle Beach?
- What Is Tenant Improvement (TI) Money, and How Do I Get It in a Myrtle Beach Lease?
- What Does a Commercial Buyer's Agent Do in Myrtle Beach, and What Does It Cost Me?
- How Do I Buy or Lease Commercial Property in Myrtle Beach?
What else do people ask about this?
Is a letter of intent legally binding?
Usually the deal terms aren't, but some clauses, like confidentiality or exclusivity, can be. Have an attorney review the wording.
Who writes the LOI?
Often the buyer's or tenant's agent drafts it, and the other side responds.
Can I back out after signing an LOI?
If the LOI is non-binding on the deal terms, generally yes, but check any binding provisions first.
How long does the LOI stage take?
It varies with how many rounds of negotiation it takes.
Should zoning contingencies go in the LOI?
Yes. If your deal depends on zoning or permit approval, raise it in the LOI.
This article is general information, not legal, tax or financial advice. Rules and requirements change. Talk to a South Carolina attorney, CPA or lender about your situation, and confirm current requirements with the agency involved.
Ready to talk about commercial space on the Grand Strand?
Whether you are leasing your first space, buying a building for your business or adding an investment property, a short call with our team can help you sort out the options and the next steps. No pressure, and no commitment.