notify the landlord before the LOI?

February 15, 2023

by an intermediary from San Francisco State University in Portland, OR, USA

Hey y'all.
thanks for your thoughts on this.
Buyer is asking for notification to the landlord about the potential sale and terms of the new lease before sending the LOI. is this common? What if the buyer falls through and the Seller ends up not selling?

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Reply by an intermediary
from University of Florida in Orlando, FL, USA

After 24 years and 400+ transactions, just when I think there can't possibly be any landlord surprises...there is something new to learn. In our office, this is the process: Once there is a signed LOI, then you can start the landlord discussion. That doesn't mean contacting the landlord immediately, it means having the buyer get prepared for that meeting or landlord process. Buyers need to have financials in order, resume or bio discussing relevant experience. And landlords don't take kindly to Searchfunders so get with your team that is funding you and be prepared. Landlord can kill the deal with zero qualms. Typically landlords want to see 3 years of personal tax returns, current financial statement, bank statement showing current funds (sometimes with enough money in that account for 18 months of rent. We help buyers and Searchfunders get creative on best course of action. And with SBA...that is an additional level of complexity to navigate. It helps to work with a broker who has done this process a few hundred times but remains open to conquering any new obstacles.

Reply by an intermediary
from The University of Michigan in Bonita Springs, FL, USA

Thank you ^redacted‌. This is a far more serious topic than the majority of buyers understand. You need to trust the seller's/broker's knowledge of the landlord and the landlord's process on this one. If the landlord is aware of and supportive of the sale, then there should be no problem with the seller/broker obtaining estimated lease terms or answers to basic questions prior to the LOI. Understand if the landlord hasn't done their due diligence on you, those terms may change drastically during the process. Landlords have generally shown very low tolerance with buyers who have attempted to go around the seller/broker or have pushed for information/decisions prior to the landlord completing their due diligence on the buyer. I've seen landlords kill deals on many occasions due to a buyer who will not respect their process.

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