I need to lease retail space at a shopping arcade. Landlords' Leasing Manager emailed me
Landlords structured its OTL to bind prospective tenants, even if they don’t sign the formal TA. Once signed by a tenant, the OTL is legally binding and enforceable on the Tenant — partially because the Tenant accepts signing Landlords' standard tenancy agreement, without any opportunity to negotiate it and mitigate risk.
Isn't the OTL superfluous? Why don't we skip the OTL? Why do Landlords even use an OTL? Why don't Landlords simply ask me to sign merely the TA?
Now I quote the germane section of the Offer to Lease (OTL) drafted by the Landlord.
10 Signing of the Tenancy Agreement ("TA") of the Premises
10.1 The TA shall be on the terms and conditions contained in the Landlords' standard pro forma tenancy agreement that shall also contain this OTL's terms and conditions.
10.2 Should the Tenant fail or refuse to execute the TA prepared by the Landlords' solicitors AND/OR make the payments in accordance with Clause 18(B) AND/OR otherwise fail to observe the requirements and conditions in this Clause 6, the Landlords may choose,
(i) subject to the Tenant's due observance and performance of all this OTL's terms and conditions — excepting the obligation in relation to the execution of the Tenancy Agreement — continue with this binding OTL OR
(ii) accept the Tenant's refusal to sign the Tenancy Agreement AND/OR to make the payments in accordance with Clause 18(B) AND/OR otherwise failure to observe the requirements and conditions in this Clause 6 as repudiation of this OTL by the Tenant,
(iii) whereupon this OTL shall immediately cease, AND all deposits paid by the Tenant under this OTL shall be wholly forfeited to the Landlords as liquidated damages and not as penalty without prejudice to the Landlords' right to claim any further damages which the Landlords may have or sustain,
(iv) PROVIDED THAT nothing in this OTL prevents the Landlords from bringing an action and obtaining a decree against the Tenant for specific performance either in lieu of the aforesaid damages or in addition thereto,
(v) AND the Landlords are entitled to re-let the Premises on any terms as it likes.
6.3 The Tenant shall bear and pay all stamp duty, registration fee and disbursements arising out of this OTL in full shares with the Landlords as stipulated in Clause 16 of this OTL — notwithstanding any failure by the Tenant for whatever reason to execute the TA.