Letter of Intent
Letter of Intent (LOI) — Acquisition
A non-binding letter setting out the key business terms a buyer proposes for acquiring a commercial property, used to establish alignment before the parties spend money on a full purchase and sale agreement.
When to use this
Send an LOI once a buyer has enough information (asking price, basic property facts) to propose real terms, but before either side pays for full due diligence or attorney-drafted contracts. A well-built LOI should already resolve the handful of business points that most often blow up a PSA negotiation later — price, deposit, due diligence period, and financing contingency — so the attorneys are drafting around agreement, not discovering disagreement.
LETTER OF INTENT (NON-BINDING)
Date: [DATE]
To: [SELLER NAME]
Re: Proposed Acquisition of [PROPERTY NAME / ADDRESS] (the "Property")
Dear [SELLER CONTACT NAME],
This letter sets forth the principal terms upon which [BUYER ENTITY NAME] ("Buyer") proposes to acquire the Property from [SELLER ENTITY NAME] ("Seller"). Except for the sections identified below as binding, this Letter of Intent is non-binding and is intended solely as a basis for negotiating a definitive Purchase and Sale Agreement ("PSA").
1. PROPERTY: [LEGAL/COMMON DESCRIPTION OF PROPERTY, INCLUDING UNIT COUNT / SQUARE FOOTAGE]
2. PURCHASE PRICE: $[PURCHASE PRICE], payable in cash at Closing, subject to prorations and adjustments customary for transactions of this type.
3. DEPOSIT: Buyer shall deposit $[DEPOSIT AMOUNT] ([DEPOSIT %] of Purchase Price) with [ESCROW/TITLE COMPANY NAME] within [NUMBER] business days after full execution of the PSA. [State whether the deposit becomes non-refundable, and when.]
4. DUE DILIGENCE PERIOD: Buyer shall have [NUMBER] days from the Effective Date of the PSA (the "Due Diligence Period") to inspect the Property, review all financial, physical, environmental, and title/survey materials, and terminate the PSA for any reason or no reason, with the Deposit returned in full.
5. FINANCING CONTINGENCY: [State whether the offer is contingent on Buyer obtaining acquisition financing, and if so, on what terms and for how long. If the offer is all-cash / non-contingent, state that instead.]
6. CLOSING: Closing shall occur within [NUMBER] days after expiration of the Due Diligence Period, or such earlier date as the parties may agree.
7. DUE DILIGENCE MATERIALS: Within [NUMBER] business days of PSA execution, Seller shall deliver to Buyer: rent roll, trailing [12/24]-month operating statements, copies of all leases and material contracts, existing survey and title policy, existing third-party reports (Phase I, PCA, appraisal, if any), and [OTHER ITEMS].
8. BROKERAGE: [Identify the broker(s) involved and confirm who is responsible for the commission.]
9. EXCLUSIVITY: Upon Seller's acceptance of this Letter of Intent, Seller agrees not to market the Property or negotiate with any other prospective buyer for a period of [NUMBER] days, during which the parties shall negotiate the PSA in good faith. [THIS SECTION IS INTENDED TO BE BINDING.]
10. CONFIDENTIALITY: The parties agree to keep the terms of this Letter of Intent, and all due diligence materials exchanged, confidential except as required to pursue the transaction (lenders, attorneys, accountants, and other advisors). [THIS SECTION IS INTENDED TO BE BINDING.]
11. NON-BINDING EFFECT: Except for Sections 9 and 10 above, this Letter of Intent is a non-binding expression of interest only. Neither party shall have any obligation to proceed with the transaction unless and until a definitive PSA is negotiated, executed, and delivered by both parties.
This offer shall remain open until [EXPIRATION DATE/TIME], after which it shall automatically expire if not accepted in writing.
Sincerely,
[BUYER SIGNATORY NAME]
[TITLE]
[BUYER ENTITY NAME]
ACKNOWLEDGED AND AGREED (as to Sections 9 and 10 only):
_______________________________
[SELLER SIGNATORY NAME], [TITLE]
[SELLER ENTITY NAME]
Date: _______________