Commercial Real Estate Letter Of Intent To Purchase Template for the United States

A letter of intent to purchase real estate is your first formal step toward buying a property in the United States. This preliminary document sets out the basic framework for the deal and lets both parties negotiate the main points before committing to a binding purchase agreement. For commercial property, the planning involved runs deeper than a residential deal, so the LOI gives everyone a clear reference point from the start.

What is a letter of intent to purchase real estate?

It's a short written document, often one to three pages, that records what a buyer proposes to pay and on what terms. It names the parties, identifies the property, states the offer price and earnest money, and sets out the due diligence period, financing expectations, and the target closing date. Most of the content stays non-binding, so either side can walk away, while a few clauses (confidentiality, exclusivity, and the handling of earnest money) are usually written to bind. A letter of intent (LOI) is common across commercial deals, and these LOIs give the parties a shared starting point before contracts are drafted. You can see a related form in our purchase and sale agreement templates, which is the binding contract an LOI leads to.

When do you need this document?

Use a letter of intent when you're serious about buying office buildings, retail spaces, industrial properties, or multi-family complexes. It demonstrates good faith to the seller while protecting your ability to run thorough due diligence. The LOI is useful when a deal involves environmental assessments, zoning compliance reviews, or several parties (brokers, lenders, and consultants) who all need the same parameters in writing. For higher-value properties where the investigation period is long, the LOI keeps the proposed price and timeline clear before anyone drafts the full contract.

What should a letter of intent to purchase real estate include?

A complete LOI usually includes the following:

• Parties and property. Legal names of buyer and seller and a clear description of the real estate.
• Purchase price and earnest money. The offer figure and the deposit the buyer will place to show commitment.
• Due diligence period. The window to inspect the property, review financials, and check title and zoning.
• Contingencies. Conditions such as financing approval, satisfactory inspection, and clear title that must be met to proceed.
• Closing terms and date. The target closing date and who pays which closing costs.
• Binding provisions. Confidentiality, exclusivity (no-shop), and governing law, which the parties intend to enforce.

Who pays closing costs?

The LOI should state how closing costs are divided, because these fees add up on a commercial deal. Closing costs can include title insurance, escrow and recording fees, transfer taxes, survey charges, and broker commissions. Setting the split in the LOI, alongside the purchase price and earnest money, means both sides price the deal accurately and avoid a late dispute over who covers what at closing.

Is a letter of intent to purchase real estate legally binding?

Most of it is not. The pricing and deal terms are generally proposals, so either party can renegotiate or decline before signing the purchase agreement. Certain clauses are drafted to bind, including confidentiality, exclusivity periods, and the terms covering earnest money. To avoid an unintended obligation, state plainly which sections bind and which do not. If earnest money is tied to binding terms, those funds can be at risk if the buyer breaches them.

Key legal considerations

Spell out your due diligence rights in detail, including property inspections, environmental assessments, financial record reviews, and zoning compliance verification. Address contingencies for financing approval, title clearance, and any required regulatory approvals. Confirm how closing costs are split and when earnest money becomes refundable or non-refundable. Clear drafting here keeps the deal moving and reduces the chance of a dispute over what the parties actually agreed.

Legal requirements in the United States

Under United States law, your letter of intent sits ahead of a purchase agreement that must meet federal and state rules for real property deals. The Statute of Frauds requires the eventual contract to be in writing and properly executed, so the LOI is an important preliminary step toward that record. Compliance with the Americans with Disabilities Act may apply if the property serves the public. Environmental Protection Laws under CERCLA can require disclosure of known hazards or contamination. State real property laws govern transfer requirements, disclosure obligations, and contract formation, while local zoning and land use regulations shape what you can do with the property. Keeping these in view as you set terms and run due diligence helps you draft an LOI that converts cleanly into a signed agreement.