The OP was being asked to pay a month's rent, simply in order that their offer might be put forward. No suggestion the price or summary terms are negotiated never mind agreed, more like 'the LL won't get to hear your offer unless you put a months cash down'.
Any LOI is more of a token gesture, a revocable 'statement of intent'. Refer my previous re: not being bound to a contract you haven't seen etc.
The 'something required to bind LL and new-tenant' is a new tenancy dated for the date the LL/tenant agrees the tenant will take possession. So why don't LLs do that? Sounds to me like they prefer to keep options open and work competing offers off each other (and perhaps keep LOI-$) when they finally figure out what it is they're going to do.
To clarify. The LOI is put forward AFTER
the tenant's offer is accepted by LL. LOI is a prelude to TA and contain agreed terms of the tenancy. Terms that are brought up during the negotiation and offer stage. These terms will be in the eventual TA. The TA is then prepared which will be signed by both parties on the day of taking over of premise or day of start of tenancy. So far this has been the procedural steps from my experience as LL.
Not clear to me why, and why you imagine the 'LOI' you describe gives any honest/genuine comfort to the tenant.
The reality is as far as LL is concerned as long as there is no good faith deposit or TA, LL is free to continue to accept other offers. Likewise tenant is free to shop for better options.
As am I. Can't see why straight into the TA is risky for the tenant, or perhaps in a SGn context, how it is riskier than starting by entering into the completely one-sided and opaque risk of having an LOI before even agreeing the terms of the TA.
PS/OT. If E41st is re: NYC, then I used to live a stroll on down @ E38th.
As explained LOI does contain agreed terms.
Why I say it can be sometimes risky for tenant to go straight to TA? Take a scenario tenant confirms a unit today and his offer is accepted by "LL". However tenant can only take over unit end of the month as unit is currently occupied. Or unit is vacant but "LL" needs time to rectify things, etc. These are common scenarios, right? Should the tenant sign the TA now even though he is not taking over the unit today? Don't forget you will be forking out the advance rent etc upon signing the TA. End of month come taking over you could not contact the agent and realise there is also no such "LL". You have been scammed. There have been reports of such scams in the press. The culprits will be easily caught but it is all very troublesome for the tenant.
I am quite surprised many are not aware of the LOI. All my TAs so far with my tenants were preceded by LOI. In my view the LOI exists as an additional due diligence step in the practical process of securing tenancy and signing of TA. As LL I honour it and the terms stated on it.
As LL I have encountered more than once where even though TA is signed, the cheques bounced. But I have already handed over unit to "tenant". These are scammers too and troublesome for LL. Hence good faith deposit is necessary and to be cleared before allowing tenant to take over unit. Maybe I am just an unlucky LL but without good faith deposit there is no deal.
PS: Btw E41st is re: Vancouver BC