What Changes at Each Stage?
In Singapore office rentals, negotiations usually move through three key documents, not two:
- Letter of Intent (LOI)
- Letter of Offer (LOO)
- Tenancy Agreement (TA)
Each stage increases your level of commitment.
1. Letter of Intent (LOI) – Tenant’s Proposal
The LOI is typically issued by the tenant (or tenant’s agent) to express interest in leasing the space.
Purpose:
- Starts formal negotiations
- Outlines headline commercial terms
Common contents:
- Proposed rent and lease term
- Security deposit
- Rent-free period
- Commencement date
- Basic reinstatement terms
Legal status:
- Generally non-binding
- Tenant can still walk away with minimal risk
👉 Think of the LOI as “This is what I’m willing to take.”
2. Letter of Offer (LOO) – Landlord’s Acceptance
The Letter of Offer is issued by the landlord after agreeing to the LOI terms.
Purpose:
- Confirms landlord’s acceptance
- Forms the basis for drafting the TA
Common contents:
- Final agreed commercial terms
- Timeline to sign the TA
- Requirement to pay a good faith deposit
Legal status (important):
- Partially binding in many cases
- Once signed and deposit paid, the tenant is often morally and commercially committed
Some LOOs include clauses such as:
- Forfeiture of deposit if tenant backs out
- Obligation to proceed to TA unless legally impossible
👉 This is the danger zone where many tenants underestimate their exposure.
3. Tenancy Agreement (TA) – Legal Contract
The TA is the final and fully legally binding document.
This is where you lock in:
- All costs and liabilities
- Renovation rules
- Insurance requirements
- Default and termination clauses
- Reinstatement obligations
Once signed, there is usually no early termination right for commercial leases in Singapore unless explicitly negotiated.
What Changes as You Move Forward?
|
Stage
|
Commitment Level
|
Risk to Tenant
|
|---|---|---|
|
LOI
|
Low
|
Minimal
|
|
LOO
|
Medium–High
|
Deposit & obligation risk
|
|
TA
|
Very High
|
Full legal & financial liability
|
Common Tenant Mistake
Many tenants think:
“I’ll just sign first, sort out the details later.”
In reality:
- Leverage decreases at each stage
- By the LOO stage, walking away may already cost money
- By the TA stage, walking away can cost years of rent
Final Takeaway
In Singapore office leasing:
- LOI = Proposal
- LOO = Commitment
- TA = Obligation
Understanding where each document stands can save tenants from unnecessary financial and legal stress.
Yes, in most cases. The LOI is generally non-binding and mainly reflects proposed commercial terms. However, always check if there are any binding clauses stated in the LOI.
Because once the Letter of Offer (LOO) is signed, landlords usually expect the deal to proceed. Paying a deposit often means you are commercially committed, and backing out later may result in the deposit being forfeited.
Usually, no. Commercial leases in Singapore typically do not allow early termination unless a break clause is explicitly stated. Without it, tenants may have to pay rent until lease expiry or find a replacement tenant.
If there is no break clause or expansion option in the Tenancy Agreement, you are still fully liable for the rent. Your alternatives are usually limited to subletting or assigning the lease, both of which require landlord approval and may involve extra costs.
Once the Tenancy Agreement is signed, the rent is locked in, regardless of market movements. Unless there is a rent review or early termination clause, tenants cannot renegotiate simply because market conditions change.
