Security Deposit Clause
(Letter of Credit) (Commercial Lease) (Pro-Landlord)

Summary

This security deposit clause is for use in a commercial lease. It provides for a security deposit in the form of a letter of credit and contains provisions favorable to a landlord. This clause includes practical guidance and drafting notes. A letter of credit is an agreement from a bank that guarantees that a tenant will be able to disburse funds in the event it defaults under the lease. It would be provided in lieu of a cash security deposit. Defined terms used in this clause should be conformed to those used in the relevant lease. For a version of this clause that favors a tenant, see Security Deposit Clause (Letter of Credit) (Commercial Lease) (Pro-Tenant). For a clause that provides for a cash security deposit with a burndown provision, see Security Deposit Clause (Cash with Burndown) (Commercial Lease) (Pro-Tenant). For a 50-state survey regarding security deposit laws, see Security Deposit (Residential and Commercial Leases) State Law Survey.