The Importance of Developing a Term Sheet

A Term Sheet usually is an unenforceable expression of intent but a valuable tool in

negotiating a favorable property sales agreement or lease. A Term Sheet emphasizes critical

elements in negotiating a sales agreement or lease. Once the landlord submits the sales

agreement or lease offer in writing, compare all offers you receive. In negotiating term sheets,

it is essential to set limits$.$ If you need expansion or renewal options, be sure your prospective

landlord or property owner addresses your concerns in their term sheet. Although not binding,

the Term Sheet request may result in the owner retracting the offer. However, the Term Sheet

is a valuable negotiating tool because it clarifies the deal. A Property owner can face a

dilemma if there is a missed opportunity to close because of their resistance to negotiate. The

owner$$s ability to turn over space can be adversely affected by the long$-$term closing prospects

if the owner gains a reputation for retracting or renegotiating term sheets.

Time Investment in Negotiating a Real Estate or Lease

Agreement

There is a mistaken belief that the deal is done after negotiating an agreed$-$upon Term Sheet. A

well$-$negotiated term sheet can certainly streamline the process, but a term sheet cannot

address all the legal issues that arise under a purchase agreement or a lease. The Term Sheet

lacks specificity and often results in ambiguities that only a negotiated purchase agreement or a

lease agreement can determine.

The below forms include questions that must be answered in completing your Term Sheet.

Detailed responses provide critical information required for several assignments that employ this

Term Sheet. Incomplete sentences, short responses, or forms containing white space will not be

graded.

FORM $1$

Term Sheet

ISSUES YOU OWNER

DESIRED OUTCOME:

What$$s the want?

Do you need to learn

more? Why? What do the

parties value?

KEY INTERESTS:

What do the parties want?

What alternatives are available if no

deal is reached?

WHAT ARE THE WALKAWAY

ALTERNATIVES:

What do you or the other side lose if

no deal is struck? Why?

What options do you have, if they

disagree with your terms?

BARGAINING CHIPS:

What do you have to offer that

the other party values?

POSSIBLE SOLUTIONS:

What solutions could work for both

parties? List solutions that will

overcome any disagreement

during the negotiations.

AGREEMENT:

List the items that both sides should

have no difficulty agreeing with