Real Estate Letter of Intent
Before a purchase and sale agreement exists, a real estate deal lives in a letter of intent. It fixes the price, the deposit, how long the buyer has to inspect, and who pays for what at closing — with enough precision that the lawyers can draft from it, and enough restraint that nobody is locked in yet.
Where property deals fall apart
Almost never over price. They fall apart over what "as is" was supposed to mean, who was paying for the survey, whether the tenant estoppels were the seller's job, and how many days the buyer really had. Those items are cheap to settle in a letter of intent and expensive to argue about once earnest money is at stake and a closing date is on a calendar.
What the template covers
Price, deposit and how the deposit behaves
The number matters less than the conditions around it. Our template records the purchase price, the earnest money amount, when it goes hard, and what happens to it if the buyer walks during diligence. Deals sour when a deposit turns non-refundable on a date nobody wrote down.
A diligence window with a stated start
Thirty days from when? Signature, or delivery of the seller's documents? That ambiguity has cost buyers entire inspection periods. The template makes the trigger explicit.
What conveys and what does not
Appliances, fixtures, equipment, existing leases, service contracts. Listing them in the letter of intent is ten minutes of work that removes the most common closing-table argument in commercial property.
Exclusivity with an end date
A seller who takes the property off the market is giving up real optionality. That is worth granting in exchange for a deposit or a shorter diligence window — and worth writing with an expiry so it does not run indefinitely.
Why the writing requirement matters here
Every U.S. state enforces some version of the Statute of Frauds, which requires contracts for the sale of an interest in land to be in writing and signed by the party to be charged. That is precisely why a real estate letter of intent needs its non-binding language stated rather than assumed: a signed writing that identifies the parties, the property and the price is exactly the shape a court looks for. The signature itself is settled — the ESIGN Act, 15 U.S.C. § 7001, gives electronic signatures the same effect as ink, and UETA does the same at state level in 49 states.
A retail building and a survey nobody ordered
A buyer and seller agreed on a strip retail property in about a week. The letter of intent covered price and closing date and stopped there. Six weeks in, the lender required an ALTA survey. Neither party had agreed to pay for it, both assumed it was the other, and the argument cost eleven days — which mattered, because the buyer's rate lock expired on day fourteen. The survey cost less than the rate change did.
Questions people ask about this
Does a real estate LOI have to be notarized?
No. Notarization is generally required for recording a deed, not for a letter of intent or a purchase agreement. What the Statute of Frauds requires is a signed writing, and an electronic signature satisfies that under the ESIGN Act.
Can I use a letter of intent for a commercial lease?
Yes, and it is standard practice. A lease LOI typically fixes rent, term, renewal options, tenant improvement allowance and who pays operating expenses — the items that take longest to draft — before the lawyers begin.
Should the LOI include the closing date?
Include a target, not a promise. Naming a target date sets pace without creating an obligation the buyer cannot yet meet, since financing and title are still unknown.
What if the seller receives a better offer after signing?
That depends entirely on whether the letter grants exclusivity. Without an exclusivity clause the seller is generally free to keep marketing the property, which is why buyers who care about certainty should ask for one and expect to pay for it.