A letter of intent (LOI) for a commercial lease is a short document, usually two to four pages, that fixes the main business terms of a deal before lawyers draft the lease. Done well, it saves weeks and keeps both sides honest. Done badly, it can bind you to a deal you never meant to sign. In Slovenia that risk is real, because the Code of Obligations treats some preliminary agreements as binding.
This guide explains what to put in an LOI, which clauses should and should not bind, and how the document fits into a Slovenian lease negotiation. It is written for tenants looking for an office, shop, warehouse or restaurant space, and for landlords who want to qualify a serious tenant.
TL;DR
- An LOI (also called heads of terms or a term sheet) records price, space, term and timing before the lease is drafted. It should be non-binding, except for a few clauses you choose on purpose.
- Under Slovenian law, a pre-contract that contains all essential elements of the main contract can be binding, so say clearly that the LOI is not.
- Keep the LOI to economics and logistics. Leave liability, indemnities and legal detail to the lease.
- Since June 2021, commercial leases in Slovenia fall under the general Code of Obligations, so the lease itself needs more careful drafting. Your LOI is where that thinking starts.
- Check market rents before you sign. Slovenia publishes reported lease transactions.
Table of Contents
- What a lease letter of intent actually is
- Is a letter of intent binding in Slovenia?
- What to include in a commercial lease LOI
- Which clauses should bind
- What not to put in
- A sample structure you can adapt
- Negotiating with data
- Perspective: how we use LOIs in practice
- How an advisor helps before the LOI
- Lease abstracting: what to do after signing
- Common mistakes
- FAQ
- Sources
What a lease letter of intent actually is
An LOI is a signed statement that two parties plan to negotiate a lease on described terms. Troutman Pepper Locke notes that LOIs are used early in a transaction to confirm a meeting of the minds on the major deal issues. It is not the lease. It does not replace the lease. Its job is to avoid spending legal fees on a deal that fails over rent or timing.
You will see the same document under other names: heads of terms, term sheet, memorandum of understanding, or in Slovene practice a pismo o nameri or izjava o nameri. The label matters less than the content and the wording on binding effect.
Who sends it first
Usually the tenant, after viewing a space and shortlisting it. A tenant's LOI is an offer to negotiate on the tenant's terms. Sometimes the landlord or the landlord's agent sends a draft instead, which tends to favor the landlord. If you receive one, you can mark it up like any other draft. Nothing in it is fixed until you sign.
Is a letter of intent binding in Slovenia?
This is the question that matters most here, and the answer is: it depends on how you write it.
Slovenian law rests on consensualism. The Obligations Code says a contract is concluded when the parties agree on its essential elements. As a Ljubljana law firm explains, a contract does not need a signed sheet of paper to be valid, since the agreement of wills is what counts. For real estate, written form is expected, and that now includes email, which the law on electronic commerce and electronic signature treats the same as paper.
Then there is the pre-contract. The Code of Obligations recognizes a pre-contract as an agreement to conclude a main contract later, and, according to a Lexology overview of Slovenian real estate law, it is binding if it contains all essential elements of the main contract.
What does that mean for a lease LOI? If your LOI names the parties, identifies the premises, states the rent and sets the term, it contains the essentials of a lease. Without a clear statement to the contrary, a court could in theory read it as a binding pre-contract. Troutman makes the same point from a US perspective: without clear non-binding language, a court may treat an LOI as binding when it covers all essential elements.
So the practical rule is simple:
- State in the first paragraph that the LOI is non-binding and creates no obligation to sign a lease.
- State that no obligation arises until both parties have signed the final lease.
- List, by number, the few clauses that do bind.
This is general information, not legal advice. Before you sign an LOI for a high-value space, have a Slovenian attorney read the binding-effect paragraph. It is the cheapest hour of legal work in the whole deal.
The phrase to avoid
Lawyers cited by Troutman warn against promising to negotiate "in good faith" toward a lease, because in some jurisdictions that wording can create binding duties you did not intend. Slovenian law also has its own pre-contractual good-faith principles, so drop the phrase and state plainly that either side may walk away until the lease is signed.
What to include in a commercial lease LOI
Troutman lists the items a workable LOI should cover. Adapted for the Slovenian market, the checklist looks like this.
| Term | What to write | Slovenian note |
|---|---|---|
| Parties | Full company names, registration numbers, addresses | Use the exact name from the court register, not a trade name |
| Premises | Address, floor, net and gross area, parking, storage | State which area the rent is calculated on |
| Rent | Monthly amount per square meter or total, indexation | Say whether VAT is added on top |
| Rent structure | Gross, modified gross or triple net (NNN) | Specify who pays operating costs, and whether NUSZ is included |
| Deposit | Amount and form (cash, bank guarantee) | State when it is returned |
| Term | Length, start date, renewal options | Fixed term or indefinite |
| Tenant improvements | Landlord contribution, fit-out period, who owns the works | Add a rent-free period if you agree one |
| Timeline | Dates for lease draft, signing, handover | Link them to conditions such as permits |
| Permitted use | The business activity | Confirm it is lawful in that building |
Two of these deserve more attention.
Rent structure and operating costs
In Slovenia, "rent" can mean very different totals. Service charges, heating, building management and the municipal land use charge can add significantly to the monthly figure. Our guide to the land use charge (NUSZ) for business premises explains who normally pays it and why it should be written down. Ask the LOI to state which costs are in the rent and which are passed on.
Term, renewal and exit
Since 19 June 2021, the Obligations Code applies to leases of business premises, as the earlier act on business buildings and premises no longer governs new agreements. PwC Slovenia's summary of the change notes the shift to the general rules. In practice there is more freedom, and fewer statutory protections to fall back on. That makes it important to agree notice periods and exit rights early. Our article on the break clause in a commercial lease shows how to handle this in the lease, and the LOI should at least say whether a break right is part of the deal.
Retail specifics
If you are leasing a shop in a shopping center, Troutman suggests asking about existing exclusive rights and use restrictions in the center so that you avoid conflicts with other tenants. Put that request in the LOI, before you commit to fit-out costs.
Which clauses should bind
Most LOIs are non-binding apart from clauses expressly marked as binding. The most common binding provisions, per Troutman, are confidentiality, exclusivity and cost reimbursement.
- Confidentiality. Reasonable for both sides. The tenant does not want competitors to hear about the move, and the landlord does not want other tenants to see the offered rent.
- Exclusivity. The landlord agrees not to negotiate with other prospects for a set period. The same source notes such periods typically run for a defined window, for example 15 to 45 days. A tenant who must plan a fit-out should ask for it. A landlord should agree only if the tenant has shown it is serious, for example with a financial statement.
- Costs. Each side pays its own, unless you agree otherwise. This avoids arguments if the deal collapses.
Anything else, especially rent and term, should stay non-binding. If a clause must bind, number it and say so.
What not to put in
A common mistake is stuffing the LOI with legal detail. The lawyers quoted by Troutman recommend that the LOI focus on economic and business terms and leave liability, indemnities and other legal protections to the final lease. If the LOI reads like a lease, you have two negotiations instead of one, and the risk of an accidental pre-contract rises.
Also avoid:
- vague phrases such as "market rent" with no mechanism for setting it;
- dates with no consequence if missed;
- unconditional commitments to fit-out or advance payments before signing;
- a reference to the LOI as an "agreement" or "contract".
A sample structure you can adapt
Below is a skeleton in plain English. Adapt the brackets and have counsel review before use.
- Heading and date. Letter of Intent, Proposed Lease of [address], [city], Slovenia.
- Parties. Landlord [company, registration number]; Tenant [company, registration number].
- Non-binding statement. This letter sets out proposed terms only. It creates no obligation to conclude a lease, and no obligation arises until both parties sign the lease.
- Premises. [Net area] sq m on [floor], plus [parking spaces].
- Rent and costs. Base rent EUR [amount] per month, excluding VAT. Operating costs [included/charged separately]. NUSZ [paid by].
- Term. [X] years from handover, with [renewal option].
- Deposit. [Amount], in the form of [cash/guarantee].
- Fit-out. Landlord contribution of EUR [amount]; rent-free period of [X] months.
- Timeline. Draft lease by [date]; signing by [date]; handover by [date].
- Binding clauses. Only paragraphs [numbers] (confidentiality, exclusivity until [date], each side bears its own costs).
- Signatures. Authorized representatives of both parties.
Free templates exist online, for example from AI Lawyer and Captain Legal. Most follow US conventions, with state, ZIP codes and different rent terms, so translate the structure rather than copying the text.
Negotiating with data
An LOI is only as strong as the rent number in it. In Slovenia, parties to lease transactions have a statutory duty to report them to the real estate market record (ETN) run by the Surveying and Mapping Authority. The authority's report on recorded lease transactions describes this reporting duty and how the rental market is divided. For a tenant, comparable rents in the same area are leverage. For a landlord, they show where a realistic asking rent sits.
Use the data to set the number in the LOI, not afterwards, since the first figure on paper becomes the anchor for everything else.
Perspective: how we use LOIs in practice
We see the LOI as a tool for focus, not for protection. Most deals that stall do so because the two sides never agreed on what they were negotiating. A one-page set of terms forces that conversation early: who pays the operating costs, how long the rent-free period runs, whether the landlord will do the fit-out.
Our advice to tenants is to write the LOI after you have seen at least two or three comparable spaces, not after the first viewing. You negotiate better when another option is real. Our advice to landlords is to treat a tenant who sends a clear, specific LOI as a serious one, and a tenant who refuses to name a number as still browsing.
And on both sides: do not leave the binding-effect paragraph to a template. Slovenian law gives pre-contracts real force, so a sentence that looks like boilerplate can decide whether you are free to walk away. If the premises are important to your business, read what to look for when leasing commercial space before you sign anything, and consider whether the final lease should be signed as a notarial deed.
— Maruša
How an advisor helps before the LOI
The LOI is the point where market knowledge turns into a number on paper. We represent tenants and landlords on commercial leases in Slovenia, from the search and market analysis through negotiation to signing. If you are a business looking for space, browse our commercial properties for rent or see how office rental in Ljubljana works with us. If you own space and want it let to the right tenant, see our commercial space leasing for landlords. Not sure whether you need help at all? Our note on when to hire a real estate advisor sets out the signs.
Lease abstracting: what to do after signing
Once the lease is signed, the LOI has done its job. The next document is the lease abstract: a one- or two-page summary of the critical data from the lease, so that nobody has to reread forty pages to find a date.
To abstract a lease, pull out:
- parties, premises and area;
- start date, end date, renewal and break rights, with the notice deadlines;
- rent, indexation, deposit and payment dates;
- who pays which costs, including NUSZ and insurance;
- fit-out obligations, restoration duties at exit;
- permitted use, subletting and assignment rules.
Compare the abstract line by line with your LOI. Differences are not always errors, but each one should be a decision you made on purpose. For portfolios, this is also the starting point of professional property management, where deadlines and indexation are tracked on the owner's behalf.
Common mistakes
- Signing in a hurry because the space is in demand. Pressure is a reason to slow down on the binding clauses, not to skip them.
- Treating the LOI as the real deal. If you pay deposits or start works on the strength of an LOI, you carry the risk.
- Mixing binding and non-binding terms without numbering. Ambiguity helps nobody, and a court will not guess your intention for you.
- Forgetting the use clause. Check that your business activity is allowed in the building before the LOI, not after.
- Leaving the timeline open. A deal with no dates tends to drift.
FAQ
What is a letter of intent to lease?
It is a short, signed document that summarizes the main terms of a proposed lease, such as rent, term, space and timing, before the full lease is drafted. Most of it is non-binding. It lets both sides test whether a deal is realistic without paying for a full contract.
Is a lease LOI legally binding in Slovenia?
Not if it is written as non-binding, but the wording must be clear. Slovenian law treats a pre-contract that contains all essential elements of the main contract as binding, so a vague LOI with rent, premises and term could be read that way. Have a Slovenian attorney check the binding-effect paragraph before you sign.
What is the difference between an LOI and heads of terms?
In practice, nothing important. Both record the principal commercial terms before a formal lease, and both should say whether they bind. The name used depends on local habit and the agent or lawyer involved.
What should a tenant watch for in an LOI?
Check which costs are on top of the rent, what the exclusivity period actually promises, and whether the document commits you to anything before the lease is signed. Retail tenants should also ask about exclusives and use restrictions held by other tenants in the same center.
Sources
- Letters of Intent in Commercial Real Estate Leases, Troutman Pepper Locke
- In brief: real estate acquisitions and leases in Slovenia, Lexology
- Legislative changes in the field of leasing business premises, PwC Slovenia
- Obligacijski zakonik (OZ), PISRS
- Prodajna pogodba za nepremičnino, odvetniška pisarna LJP
- Report on recorded lease transactions, Geodetska uprava RS (eProstor)
- Letter of Intent for Commercial Lease Template, AI Lawyer
- Letter of Intent to Lease Template, Captain Legal
