Last Updated October 13, 2023
Offer to Lease
Alternate Names:
An Offer to Lease is also known as a/an:
- Proposal to Lease
- Offer to Rent Letter
- Lease Proposal
What is an Offer to Lease?
An Offer to Lease, also known as a proposal to lease, is drafted when a prospective tenant is looking to lease commercial space from a landlord or property manager.
An Offer to Lease is often the first stage in a commercial tenancy process and can be used to set the foundation for a Commercial Lease Agreement by including some preliminary rental terms like the rent price and the starting date of the lease term.
What type of property can I use an Offer to Lease for?
Typically, an Offer to Lease is used as a preliminary step for leasing commercial property rather than residential property.
Commercial property includes:
- Offices
- Buildings
- Retail stores
- Restaurants
- Warehouses
- Industrial spaces
- Other spaces that don't fit into specific categories, e.g. gyms, spas, health clinics, etc.
An Offer to Lease is generally used to:
- Make an offer to a landlord to lease commercial space
- Outline the basic terms of the rental agreement before signing the formal Commercial Lease
What should be included in a lease proposal?
In addition to the type of property and some personal details about the tenant and landlord (names and contact information), the lease proposal should include:
- Details of the property including location, property boundaries, and permitted use of the property
- The start and end dates of the lease, which can also include a move-in date prior to the lease start date
- Rent details, including how it's calculated, what costs are included, how taxes are paid, and how often rent is paid (monthly or annually)
- Security deposit details
- Lease details, including whether or not the lease will be attached to the offer or provided in the future
There should also be an expiry date on the offer. Without one, an offer is generally considered expired after a reasonable period of time has passed. However, what is considered "reasonable" can be subject to the interpretation of a court and can vary by state, so it's best to simply specify a precise expiry.
Unless otherwise specified, the party making the offer is free to revoke their offer at any time.
A formal Commercial Lease Agreement is required for a legal tenancy to take place. Although an Offer to Lease can contain certain lease terms, there are other requirements and terms that need to be addressed in a formal Lease Agreement.
For instance, provisions about eviction, late payments, and maintenance and cleaning responsibilities are not typically discussed in a lease proposal.
It is not recommended for a tenant and landlord to enter a tenancy agreement without a full, detailed lease describing their obligations and responsibilities. If some terms are left out or are unclear, it could lead to disputes between the parties.
Is an Offer to Lease legally binding?
An Offer to Lease that describes essential elements of a future Lease Agreement can be deemed to be binding. This means that if certain terms (like rent total) are agreed upon and accepted by both the prospective tenant and the landlord, both parties are likely to be legally bound to the terms. Those terms will appear in the same way in the formal Lease Agreement.
If the parties want the offer to be non-binding, they will have to make that intent clearly known. It's recommended to avoid including essential elements of the lease in the document.
