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Letter of Intent Real Estate

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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

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

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

At closing, Seller, at Seller's expense, shall deliver to Purchaser the items described in Section 10 and all other items that are reasonably requested by Purchaser to transfer all right, title and interest of Seller in the Property to Purchaser, and to give Purchaser reasonable assurances regarding marketable title, environmental, operational and other information with respect to the prior history and use of the Property.

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, which may include (but is not limited to) an examination of title, inspections of the Property, a review of the Property's financial performance and the obtaining of all necessary third-party reports.

Purchaser will engage a qualified engineering firm to perform a Phase I environmental audit of the Property. Purchaser may waive the requirement of a Phase I environmental audit should Seller provide Purchaser with a prior Phase I audit acceptable to Purchaser. Purchaser will engage a consulting engineer firm to perform a physical inspection of the Property. One-half of the cost of this engineering inspection will be paid for by Purchaser and one-half shall be paid for by Seller.

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, planning and zoning documents and approvals and all environmental or soil or other construction tests for the Property for Purchaser's examination.

Seller shall cooperate with Purchaser in providing access to Purchaser's engineers, analysts and appraisers, at Purchaser's sole expense, to conduct the inspections of the Property within the inspection period. The inspections will not disturb the use of the Property by Seller, and Purchaser shall be responsible for any damages caused by such inspections. 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; or

2. Advise Seller of any problems which need to be addressed, in which case unless the parties can reach a satisfactory resolution of such problems, Purchaser may either elect to resolve these problems, or terminate the agreement with no further liability on the part of either party.

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.

(E.G., Purchaser obtaining a commitment for a first mortgage loan of $ to finance its purchase of the Property within 120 days after the execution by both parties of a mutually satisfactory purchase and sale agreement.)

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, warranting that such personal property is free and clear of all encumbrances and security interests;

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,

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

By:

Title:

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What a Real Estate Letter of Intent Is and How It Is Used

A Letter of Intent Real Estate is a preliminary written statement outlining the principal terms under which parties expect to negotiate and contract a real property transaction. It normally frames key points such as buyer and seller identities, property description, proposed purchase price, earnest money, major contingencies, closing target dates, and whether the LOI is binding or non‑binding. The LOI helps allocate time and cost for due diligence, coordinating financing and title review, and preparing a formal purchase and sale agreement while preserving negotiation flexibility for both sides.

Why an LOI Matters Before a Purchase Agreement

A Letter of Intent Real Estate clarifies expectations early, reduces negotiation cycles, and documents deal points for lenders, brokers, and counsel while preserving negotiable items.

Why an LOI Matters Before a Purchase Agreement

Who Typically Prepares and Reviews an LOI

Real estate brokers, buyers, sellers, investors, and outside counsel commonly draft or review LOIs to align on commercial terms before contract drafting.

  • Buyers and investors — use LOIs to secure exclusivity, outline financing contingencies, and set due diligence timelines.
  • Sellers and listing brokers — rely on LOIs to compare offers and to obtain conditional commitments from buyers.
  • Lenders and escrow agents — use LOI terms to anticipate title, survey, and financing conditions ahead of underwriting.

Having clear roles and early counsel review reduces misunderstanding and accelerates the transition to a binding purchase and sale agreement.

Step-by-Step: Completing a Letter of Intent Real Estate

Complete the LOI in order: identify parties, describe property, set price and deposits, list contingencies, state binding status, and sign.

  • 01
    Identify Parties: Enter full legal names and contact details for buyer and seller.
  • 02
    Describe Property: Provide street address and tax parcel ID where possible.
  • 03
    Set Economic Terms: List purchase price, deposit amounts, and allocation of closing costs.
  • 04
    Add Deadlines: Specify due diligence, financing, and closing target dates.

Where an LOI Goes and Who Sees It

An LOI is shared with counterparties, brokers, lenders, and legal counsel to coordinate next steps; clear routing speeds underwriting and title work.

  • To Seller/Broker: Primary delivery to listing agent or seller contact for initial acceptance or counteroffer.
  • To Lender: Provide LOI to lenders early to confirm financing assumptions and timelines.
  • To Escrow/Title: Share property details and deposit terms to prepare escrow instructions and title commitment.
  • To Legal Counsel: Counsel reviews binding language, contingencies, and risk allocation before signing.

Typical Digital Workflow Settings for Completing an LOI

Configure your document workflow to capture signatures, preserve audit trails, and enforce deadlines when using an eSignature platform.

Field Configuration
Authentication Email verification or SMS code for signer identity
Signature Order Set sequential or parallel signing order depending on parties
Reminders Automatic email reminders for unsigned documents
Audit Trail Enable IP, timestamp, and action log capture

Technical Considerations for eSigning and eSubmission

Ensure your platform supports required file formats, signer authentication, and preserves a defensible audit trail.

  • File Formats: PDF and DOCX supported for LOI templates
  • Signer Authentication: Email, SMS code, or stronger methods as needed
  • Integrations: CRM and cloud storage connections simplify routing

Common Dates and Deadlines to Include

Spell out each critical date so parties understand the timeline for due diligence, financing, deposit delivery, and closing.

LOI Effective Date:

Date parties sign; triggers timelines and response windows

Response Period:

Time allotted for seller acceptance or counteroffer

Due Diligence Deadline:

Final date to complete inspections, surveys, and reviews

Deposit Deadline:

When earnest money must be delivered to escrow

Target Closing Date:

Projected date for completing the purchase and sale

Key Stages From LOI to Closing

A sequential view of milestones shows how the LOI advances toward a binding agreement and closing.

01

LOI Execution

Parties sign and record the effective date for subsequent timelines.

02

Due Diligence

Buyer completes inspections, title review, and lender conditions.

03

Contract Drafting

Counsel prepares a purchase and sale agreement based on LOI terms.

04

Closing

Final documents signed, funds exchanged, and title transferred.

Common Mistakes to Avoid When Preparing an LOI

  • Unclear binding language — failing to state whether the LOI is binding on price or confidentiality invites disputes and wasted effort.
  • Missing critical dates — omitting due diligence or deposit deadlines causes uncertainty and can void conditional rights.
  • Inadequate party identification — using trade names or nicknames rather than legal entity names complicates title and closing.
  • Vague property description — reliance on general descriptions instead of address and parcel ID leads to survey and title errors.

Security and Compliance Considerations for Signed LOIs

Transport Encryption: TLS 1.2/1.3
Data at Rest: AES-256 encryption
Audit Controls: Comprehensive audit trail capture
Regulatory Standards: SOC 2 Type II available
Healthcare Safeguards: HIPAA support with BAA
eSignature Law: ESIGN and UETA compliant

Risks and Potential Consequences of Errors in an LOI

Contractual Ambiguity: May lead to litigation
Missed Deadlines: Loss of contingencies
Invalid Signatures: Could require reexecution
Title Issues: Delays at closing
Financial Exposure: Deposit forfeiture risk
Tax Consequences: Incorrect reporting outcomes

Real-World Examples of LOI Use in Transactions

These short case summaries show how real companies used LOIs to speed negotiations and clarify next steps before contract drafting.

Optica Ventures (Brokerage)

A regional brokerage used an LOI to summarize buyer terms and coordination points

  • LOI captured price, deposit, and 30-day due diligence
  • Brian Fitzgibbons, COO, notes the simple interface eased customer interactions and helped move offers to binding contracts efficiently.

Martin Properties (Developer)

A developer issued an LOI to reserve a parcel while final permits were obtained

  • LOI set financing contingency and a three‑month exclusivity period
  • Tim Martin reported the LOI enabled remote execution with compliance controls, maintaining deal momentum without in‑person signing.

How an LOI Differs from Other Preliminary Documents

Compare Letters of Intent with term sheets, memoranda of understanding (MOU), and binding purchase agreements to avoid confusion over enforceability.

Document Type Binding? Typical Use
Letter of Intent usually no outline terms, reserve exclusivity
Term Sheet often no summarize key business terms
Memorandum of Understanding varies broad cooperation terms
Purchase Agreement final obligations and conveyance

Common eSignature Vendor Pricing and Feature Snapshot for LOI Workflows

Compare basic price and capability attributes across major eSignature vendors. signNow appears first per vendor ordering rules.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies Varies Yes, limited Yes, limited
Bulk Send Yes Yes Yes Yes Yes
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Varies by plan Varies by plan No No

Practical Tips for Accurate and Efficient LOI Completion

Follow these practices to reduce revisions, accelerate review, and create a durable record for negotiations.

Be explicit about binding status
State clearly whether price, confidentiality, exclusivity, or any other provisions are intended to be legally binding; ambiguous LOIs frequently generate disputes and slow closings.
Use precise dates and formats
Record all deadlines in MM/DD/YYYY format and include time zones when parties operate in different jurisdictions to avoid deadline confusion.
Attach exhibits for clarity
Include a site plan, preliminary survey, or financing pre‑approval as attachments when these items materially affect obligations or contingencies.
Document authority to sign
If a corporate or trust entity signs, confirm and note the signer's title and that they have appropriate internal authorization to bind the entity.

Frequently Asked Questions About Letters of Intent Real Estate

Answers to common questions on enforceability, signatures, notarization, and next steps after an LOI is signed.


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