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Letter of Intent

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Letter of Intent to Purchase Commercial Real Estate

(Date)

To: (Seller)

Street Address

Post Office Box

City, State , USA

Re: Letter of Intent to Purchase Commercial Property Located at

(street address, city, county, state, zip code)

Dear Sir:

Pursuant to this Letter of Intent, (Purchaser) intends to purchase from

(Seller), a corporation organized and existing under the laws of the state of , with its principal office located at

(street address, city, county, state, zip code), that certain property located at

herein referred to as Property, on the following terms and conditions:

1. Description of Property

All real and personal property located at

, including all leases, contracts and intangibles related to the Property, and legally described as follows:

2. Purchase Price

The purchase price shall be $ , cash.

3. Closing of Transaction

Closing will take place on (date of closing), or

4. Title and Survey

Seller shall deliver to Purchaser:

A. A title commitment to insure Purchaser as the owner of the Property in the amount of the purchase price, with copies of all exceptions or matters referenced on the title commitment; and;

B. The existing as-built survey for the Property within business days following the execution of this Letter of Intent.

5. Earnest Money

If Purchaser agrees to accept the Property at the end of the day approval period as provided in Section 8, Purchaser shall make a deposit of $ cash as Earnest Money.

This Earnest Money will be applied to the purchase price at closing or returned to Purchaser in accordance with Section 8.

6. Costs

Seller agrees to pay the following costs:

A. ALTA Form B extended coverage title policy including appropriate insurance, zoning and environmental endorsements;

B. Documentary stamps and intangibles taxes, if any;

C. Transfer taxes, if any;

D. Recording fees for warranty deed, if any;

E. Cost of Survey;

F. One-half of any environmental audit; and

G. Costs to clear title, if any.

Purchaser will pay for one-half of any Phase I environment audit, his own inspection costs, and attorney's fees. Other costs will be adjusted in accordance with local pricing and local custom. Ad Valorem taxes will be pro-rated between Purchaser and Seller to the date of closing.

7. Purchase and Sale Agreement

Purchaser will provide Seller with a form of a purchase and sale agreement for the Property containing the essential provisions of this Letter of Intent and other provisions acceptable to the parties. If the form of purchase and sale agreement is not agreed to and executed within from the date of this Letter, then this Letter of Intent shall become null and void and no party shall have any further obligation under it.

8. Approval Period

A. Commencing with receipt of the documents for the Property listed on Exhibit A attached hereto and made a part hereof, Purchaser shall have a day inspection period ending on the approval date to perform his complete due diligence review...

B. To facilitate Purchaser's inspections within the approval period, Seller shall, in addition to items listed on Exhibit A, deliver or make available all books records and financial documents...

On or before the approval date, Purchaser shall either:

1. Notify Seller that it accepts the Property and place into escrow the Earnest Money, subject only to the remaining conditions stated in the purchase and sale agreement;

2. Advise Seller of any problems which need to be addressed...

C. If Purchaser is not satisfied as to any matters reviewed by it during the approval period or if any other conditions to the sale of the Property cannot be met, whether during or after the approval period, then Purchaser shall receive the return of his Earnest Money.

9. Conditions of Purchase

This offer is conditioned upon the following:

A. Purchaser's satisfactory review of the title commitment provided pursuant to Section 4 and all matters affecting title to the Property;

B. Purchaser's inspection and approval of the as-built survey and the plans and specifications for the Property;

C. Evidence of proper zoning and other permits required for the operation of the Property;

D. Purchaser's inspection and approval of a soils report which shall include a toxic waste sign-off and construction testing procedures;

E. Purchaser's acceptance of the Property by the approval date; and

F.

10. Items to be Delivered at Closing

The following items shall be delivered at closing:

A. The conveyance of title to the Property by general warranty deed, free and clear of all encumbrances;

B. The conveyance of title to the personal property of Seller located at the Property by bill of sale...

C. At Seller's expense, an ALTA Form B extended coverage owner's title insurance policy issued in accordance with the title commitment which has been accepted by Purchaser. Purchaser reserves the right to increase the face amount of the policy, at his own expense);

D. Sufficient evidence that Seller is authorized to sell the Property;

E. All items listed on Exhibit B, and to the extent possible, updated to within days of the closing date;

F. Appropriate indemnifications from Seller regarding claims, liabilities, environmental matters and litigation;

G. An assignment of all contracts, permits, licenses and similar items affecting the Property;

H. Pay-off letters and appropriate discharges and releases for any liens encumbering the Property.

11. Seller’s Documents

Upon execution of this Letter of Intent, Seller will forward to Purchaser, within business days, the items listed on the attached Exhibit C for the Property.

12. Time of Expiration

Unless the undersigned shall receive from Seller an executed copy of this letter of intent on or before (date) at o’clock (the time of expiration),

the offer contained in this Letter of Intent shall lapse and terminate at the time of expiration and shall be null and void and of no further force or effect.

13. Negotiation with Other Parties

So long as Purchaser is not in default of this agreement or the subsequently executed purchase and sale agreement, Seller shall not enter into any agreement with other prospective purchasers regarding sale of Property.

14. No Definitive Contract

This Letter is intended as an expression of the mutual intent of the parties as to certain aspects of a proposed transaction. The parties, however, agree that there are material terms as to which agreement has not been reached.

The parties also agree that this letter is not intended to be and is not to be construed to be a definitive contract and is subject to execution and delivery of purchase and sale agreement satisfactory to our respective counsel.

In the event that the purchase and sale agreement described in this letter of intent is not executed by both parties within after Purchaser submits its proposed purchase and sale agreement to Seller under Section 7, then this Letter of Intent shall have no further force and effect and neither party shall have any obligation under it.

15. Brokers

Purchaser (or Seller) shall be responsible for the brokerage fee or commission payable in connection with the proposed transaction.

Each party shall indemnify the other for the claim of any other broker or other party claiming any fee or commission arising out of the acts of the indemnifying party.

If the above terms and conditions are acceptable, please sign both copies of this letter, retain one copy for your files, and return the second signed copy to us.

Sincerely,

John X. Purchaser

We hereby accept the offer described above on this the day of , 20 .

Acme Sellers, Inc.

By:

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What a Letter of Intent Is and When It’s Used

A Letter of Intent (LOI) is a preliminary written statement that outlines the principal terms and mutual expectations of a proposed transaction or agreement. LOIs commonly appear in business negotiations, mergers and acquisitions, real estate deals, vendor relationships, and joint ventures to record key points — parties, scope, timing, price, and any exclusivity or confidentiality terms — before drafting a definitive contract. An LOI can be either non‑binding as to the agreement’s substance while creating binding obligations for specific provisions such as confidentiality or exclusivity, depending on its language and intent to be bound.

Why Parties Use a Letter of Intent

An LOI clarifies deal terms early, sets expectations for due diligence and timing, preserves negotiation momentum, and can protect sensitive information through binding confidentiality or exclusivity clauses while the parties prepare a final agreement.

Why Parties Use a Letter of Intent

Who Typically Prepares and Reviews an LOI

Multiple stakeholders prepare and review LOIs to align commercial, legal, and operational expectations before committing to a definitive contract.

  • Buyers and acquirers who need to lock in key commercial terms during due diligence and to secure exclusivity rights while evaluating the target.
  • Sellers, property owners, or vendors who want written confirmation of pricing, timing, and buyer obligations before investing in transaction preparations.
  • Legal counsel and transaction advisors who draft binding clauses (confidentiality, exclusivity) and ensure the LOI’s non‑binding provisions preserve negotiation flexibility.

Core Sections to Include in a Professional LOI

A clear LOI organizes the deal into concise sections that identify parties, express the transaction purpose, set material terms, and state which provisions are binding versus non‑binding.

Parties

Full legal names and entity types for every party, including any parent or affiliated entities that must be bound by the eventual agreement.

Purpose

Short description of the transaction or relationship being contemplated, including scope, assets, or services involved and the intended business outcome.

Material Terms

Price or consideration, key milestones, closing conditions, payment terms, and any allocation of liabilities or contingencies.

Due Diligence

Timeline and scope for inspections, document requests, site visits, and information exchange needed to reach a definitive agreement.

Binding Clauses

Explicitly label confidentiality, exclusivity, or breakup fee provisions as binding; describe duration and remedies for breach.

Signatures

Signature blocks with printed names, titles, dates, and a clear statement identifying which provisions (if any) are intended to be binding.

Step-by-Step: Drafting and Finalizing an LOI

Follow a consistent sequence to limit risk: outline terms, assign responsibilities, confirm binding items, and obtain signatures from authorized representatives.

  • 01
    Outline Terms: Draft key commercial points and intended timeline for the transaction.
  • 02
    Identify Binding Items: Explicitly mark confidentiality or exclusivity as binding clauses.
  • 03
    Review and Revise: Legal and finance teams review language and add required protections.
  • 04
    Execute: Authorized signers date and sign; retain executed copies for records.

Digital Setup: Configuring an LOI Workflow

When using an eSignature platform, configure fields, authentication, and notifications to match your approval workflows and compliance needs.

Field | Configuration Type | Value
Template Save the LOI as a reusable template to standardize terms and reduce manual errors.
Signer Order Set sequential or parallel signing depending on required authorization flow.
Authentication Choose email plus optional SMS or ID verification for higher assurance.
Notifications Enable reminders, completion receipts, and audit logs for each signer.

How an LOI Moves From Draft to Signed

A predictable flow reduces friction: prepare the draft, circulate for comment, finalize binding clauses, and complete signatures with an audit trail.

  • Draft: Prepare LOI with clear binding vs non‑binding labels.
  • Negotiate: Exchange edits and confirm material points in writing.
  • Execute: Signatures applied by authorized representatives.
  • Archive: Store executed LOI with audit trail and related documents.

Technical Considerations for Electronic LOIs

Choose an eSignature platform that supports audit trails, conditional fields, and the level of signer authentication required by the transaction.

  • File Formats: PDF and DOCX are standard for LOIs.
  • Integrations: Connectors to CRM and cloud storage streamline routing and recordkeeping.
  • Security: Encryption and access controls protect confidential terms.

Essential Information to Collect in the LOI

Parties' legal names: Full entity names
Contact details: Street address and email
Effective date: MM/DD/YYYY format
Consideration: Price or payment terms
Key deadlines: Due diligence and closing dates
Binding items: Confidentiality/exclusivity specifics

Common Mistakes to Avoid When Preparing an LOI

  • Failing to state which parts are binding creates unintended obligations or disputes about enforceability.
  • Using vague terms for price or scope leaves material terms open to differing interpretations during contract drafting.
  • Overlooking signer authority (no corporate resolution or power of attorney) can render execution voidable.
  • Neglecting to preserve audit evidence when eSigning weakens the record used to prove intent or attribution.

Risks and Legal Consequences to Consider

Unclear Binding Status: Potential for breach claims
Confidentiality Breach: Monetary damages or injunctions
Reliance Losses: Compensation for incurred costs
Authority Challenges: Possible voiding of LOI
Antitrust Concerns: Careful with exclusivity terms
Regulatory Exposure: Sector rules may apply

Who Can Sign an LOI

Authorized Officer — CEO

An authorized corporate officer such as a CEO or president typically signs on behalf of a company; include a statement confirming corporate authority and, where required, reference a board resolution or power of attorney.

Authorized Agent — Counsel

A designated agent or attorney‑in‑fact may sign if a valid power of attorney or corporate authorization is attached; verify scope and duration of any delegated signing authority before execution.

Typical Letter of Intent Use Cases

These concise examples show how LOIs structure early commitments across common transaction types.

Commercial Lease LOI

A landlord and prospective tenant outline rent, term, and tenant improvements in a short LOI to reserve the space while negotiating the full lease.

  • The LOI sets a 30‑day exclusivity and a 45‑day due diligence period.
  • The LOI explicitly states that confidentiality and exclusivity are binding while remaining clear that lease execution is subject to finalized lease terms and approvals.

Acquisition LOI

A buyer and seller record purchase price range, timeline, and key conditions to begin due diligence and negotiate the purchase agreement.

  • The LOI often includes a 60‑day exclusivity window and escrow arrangements.
  • Parties commonly agree confidentiality is binding and that the LOI is non‑binding on price and representations except for any expressly stated binding provisions.

Common LOI Timelines and Deadlines

LOI timelines set expectations for response, exclusivity, diligence, and signing; use clear dates or duration periods to avoid misunderstandings.

Response Deadline:

7–14 days for the recipient to accept or propose changes

Exclusivity Period:

Typically 30–90 days while due diligence proceeds

Due Diligence Window:

Commonly 30–60 days to inspect records and operations

Signing Definitive Agreement:

Target closing date often set 30–120 days after LOI execution

Termination Date:

Specify end of LOI or conditions that terminate obligations

Frequently Asked Questions About Letters of Intent

Answers to common LOI questions focus on enforceability, electronic execution, revisions, and how to handle confidentiality and exclusivity.


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