Calling a document a “letter of intent” or an “offer to lease” doesn't automatically make it non-binding. What a court looks at is the language and the conduct, not the heading.
Key takeaways
An offer to lease reads like a placeholder — a short document meant to get the basic terms agreed before the lawyers draft the real thing. Sometimes that's exactly what it is. Just as often, though, specific clauses inside it are fully enforceable the moment both sides sign, regardless of how preliminary the rest of the document looks. Knowing which parts are which, before signing, is the entire point of reading it carefully.
The function of a preliminary document — whether it's called an offer to lease, an agreement to lease, or a letter of intent — is to lock in the fundamentals before either side spends real money on legal drafting: the space, the rent, the term, and the major business terms, agreed “before investing the time and cost of negotiating and signing a full lease.” “Most letters of intent are drafted with the intention of being non-binding, serving as a framework for negotiation rather than an enforceable agreement in themselves.” That's the intention behind most of these documents. It is not, on its own, what makes any individual document actually non-binding in a specific case.
This is the point worth taking seriously before signing anything: “whether a particular letter of intent is actually binding in Ontario doesn't depend on its label…courts look at the specific language used and how the parties behaved.” A document titled “non-binding offer to lease” that nonetheless uses firm, unconditional language throughout, or that both parties proceed to act on as though it were final — a tenant starting a build-out, a landlord taking the space off the market and telling other prospects it's gone — can be found binding despite its title. Conversely, a document with no heading at all disclaiming binding effect can still be read as non-binding if its own language is genuinely conditional and preliminary throughout.
The more common and more overlooked trap runs the other way: a document that's genuinely non-binding on its major terms can still carry individual clauses that bind regardless. “Even a document meant to be generally non-binding can contain individual clauses, such as an exclusivity or no-shop commitment, a confidentiality obligation, or an agreement to negotiate in good faith, that are intended to bind the parties.” An exclusivity clause, in particular, is the one that catches tenants off guard most often — agreeing not to negotiate with other landlords for a defined period is a real commitment, enforceable on its own terms, even while the rent and term the same document proposes remain fully up for negotiation.
A well-run offer to lease, whichever way it's drafted, should say explicitly what it is: “a letter of intent should say explicitly whether it's binding overall, and identify clearly which specific provisions, if any, are meant to be enforceable.” That single instruction resolves most of the ambiguity that later becomes a dispute. Beyond the binding-status question, the offer is also where the major commercial terms get fixed — the ones that determine how much room the full lease negotiation actually has left: base rent, the operating cost structure, fixturing period length, any tenant improvement allowance, and increasingly, conditions like a satisfactory credit review of the tenant being made an explicit condition the deal is subject to, rather than left to derail the deal after the full lease is already substantially drafted.
What to check before signing an offer to lease
Does it state its own binding status? If it doesn't say, don't assume — ask, or have it added.
Which specific clauses bind regardless? Exclusivity, confidentiality, and good-faith negotiation commitments are the usual candidates, even inside an otherwise non-binding document.
Are the deal's major economics actually fixed? Rent, term, TI allowance and fixturing period agreed here are rarely reopened once the full lease drafting starts.
Are your conditions actually conditions? A credit review, financing, or board approval you need should be an express condition precedent in the offer itself, not an assumption.
A landlord and a prospective tenant sign a two-page offer to lease headed non-binding, subject to a formal lease. The document fixes base rent, a five-year term, a 90-day fixturing period, and a $32.00/sq. ft. TI allowance, and includes a clause committing the landlord not to show the space to other prospective tenants for 30 days. Three weeks in, the tenant's board declines to proceed, and the tenant claims the whole document was non-binding, pointing to its own heading.
The heading covers the major terms — rent, term, and the allowance genuinely remain open until the full lease is signed, and the tenant walking away from those isn't a breach. The 30-day exclusivity clause is a different matter: it's specific, unconditional language inside the same document, and it was performed on — the landlord actually did decline to show the space elsewhere for those three weeks. That clause survives the document's general non-binding heading and remains enforceable on its own terms, which is exactly the trap the heading alone can't protect against.
It depends entirely on how the offer itself characterizes the deposit — as a good-faith deposit refundable if the parties don't reach a final lease, or as consideration for the exclusivity period that's earned by the landlord regardless of outcome. This should be stated explicitly in the offer rather than left to be inferred.
Only to the extent the offer itself is non-binding on the point being walked away from. If the offer's major terms are genuinely preliminary, yes; if the offer's own language or the parties' conduct made those terms firm, backing out can expose the landlord to a claim for damages or specific performance.
The offer, ideally, and before signing rather than after — before you sign anything, a letter of intent or offer to lease can bind you to key terms even while the rest of the deal stays open. Waiting until the full lease stage to bring in counsel means reviewing a document whose major economics may already have been effectively locked in by the offer that came before it.
The timing isn’t discretionary either way. Ontario’s general regulation under the brokerage licensing statute requires a brokerage that receives money in trust in connection with its business to deposit it into its trust account within five business days — a rule that applies to a deposit paid with an offer to lease exactly as it does to one paid on a purchase, regardless of how the offer itself characterizes the money.
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