Letters of Credit in Lease Transactions, Part II: Drafting Tips
Probate and Property, November/December 2002, Volume 16, Number 6
By Susan Fowler McNally, Carter Klein, and Michael Abrams
If the landlord allows or requires its tenant to post a letter of credit (L/C), instead of a cash security deposit or prepaid rent, to secure the tenant’s lease obligations, the landlord must consider what form, language, and draw conditions should be contained in the L/C. Using an L/C with the proper format, language, and draw conditions will minimize or avoid problems.