Legal Question in Real Estate Law in California
I have an LOI to lease some properties that are currently operated by an existing tenant. The LOI was executed months ago after several drafts, and is effectively a term sheet, with the only thing left to do is finalize the leases. There are no contingencies in the LOI, and I was told in October that their Real Estate Committee had approved the deal.
The properties were to be delivered December 1, but no later than January 1. Since that time, they have stalled and made excuses. They have sent proposed revisions to the LOI, which I balked at due to some contingencies which have now evaporated. They then accused me of trying to change the terms, which I did not, and they backed down again. Their EVP has told me that they are afraid I will sue.
I was also told that their board was angry about the existing tenant and wanted him out. My LOI was used at the November board meeting to show that they had a new tenant and appease the board. Now they typically call me every week with a new excuse. I have lost hundreds of thousands in costs associated with these leases. Should I walk away, or take some kind of action?
3 Answers from Attorneys
Either resolve it among yourselves, walk away, or sue. You've let them push you around. If you intend to exercise your option and rights, do so. Since they don't seem to 'fear' you enough to honor the deal, then hire an attorney to either convince them to do so, or sue for your rights and/or damages. If serious about doing this, feel free to contact me.
Without seeing the actual text of the LOI, or the circumstances and events surrounding it's negotiation, it's almost impossible to determine what type of action you might take. Normally, LOI's are not binding, although depending on the circumstances they may include some ancillary terms that would be considered binding contractual agreements if necessary formalities are observed. Also, if the document, by its terms, too closely resembles a contract, a court might construe it as such, even though it's described only as a letter of intent.
Since this applies to a real property lease which I suspect would have a term of at least one year, the Statute of Frauds would almost assuredly apply, requiring a writing executed by the party against whom the writing, i.e. the LOI, is to be enforced.
Feel free to let me know if you need further information.
You may have the basis for a lawsuit, but I would need to review the documents to be certain. If you would like to forward them to me, I will review them for you free of charge and provide you with an initial consultation to review the documents.
Please feel free to contact me through my website RulesofEmployment.com
Scott
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