Letter of Intent (LOI) Template (Free Download + AI Generator)

In many business, real estate, employment, and education settings, parties want to record key terms before they are ready for a full contract. A letter of intent is a short, structured document that outlines the main points of a proposed deal or relationship without necessarily locking anyone into a final agreement. Used well, it captures what the parties think they have agreed so far, sets expectations for next steps, and reduces misunderstandings as negotiations continue. It can also help external reviewers — such as investors, lenders, or regulators — understand the shape of a transaction before all the details are in place.

Key takeaways

• Clarifies the major business terms early, before time and money are spent on detailed drafting.

• Can be drafted as binding or non-binding in whole or in part, depending on wording and intent.

• Widely used in acquisitions, real estate deals, hiring, and university admissions, but the tone and content differ by context.

• Helps organize due diligence and negotiation, often sitting between a term sheet and a full contract.

• Works best when it clearly separates commercial “wish list” terms from any clauses that are meant to be legally binding.

Download Template: Letter of Intent (LOI) — or customize one with our AI Generator, then have a lawyer review before signing.

Each U.S. state has its own legal nuances — what’s non-binding in one state may be partially enforceable in another. To ensure compliance with local standards, choose your jurisdiction-specific LOI version:

California | New York | Texas | Florida | Illinois | Washington

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Who Should Use This Document

This document is relevant to almost anyone planning a significant transaction or long-term relationship. Business buyers and sellers often use it to set out the main economic terms of a proposed acquisition before commissioning a full purchase agreement. Landlords, tenants, and developers rely on it in complex leasing or development projects to outline rent, build-out, or phasing concepts. In hiring and education, it can express mutual interest and preliminary terms when the parties are not yet ready for a final contract.

Small and mid-sized businesses may use a letter of intent to purchase business assets, to explore a merger, or to frame a strategic partnership. Individuals encounter it in contexts such as a letter of intent to purchase real estate, a job-related expression of interest, or a letter of intent for university admissions. The common thread is the need to record key terms and serious intent while preserving flexibility to walk away if the final agreement cannot be reached.

This document is used in both B2B and B2C scenarios and can support domestic or cross-border transactions. However, for very simple, low-risk deals, jumping straight to a short contract may be more efficient than drafting a preliminary document that will never be used again.

What Is a Letter of Intent?

At a basic level, people searching for letter of intent meaning want to know whether this document is a contract or something less. In U.S. practice, it is generally a preliminary agreement that summarizes key terms the parties have discussed — such as price ranges, timing, and responsibilities — without necessarily committing them to complete the transaction. In business and real estate, it often functions like a term sheet or “heads of terms,” outlining the framework of a deal before a detailed contract is drafted.

Typically, the document identifies the parties, describes the proposed transaction, and lists essential terms: purchase price, payment structure, key milestones, due diligence periods, and closing conditions. It may also include provisions about confidentiality, exclusivity (a “no-shop” clause), and the parties’ duties during negotiations. The central function is to record the current state of agreement and provide a roadmap for the final contract, rather than to replace that contract.

Whether a particular document is binding depends heavily on its wording and context. Many parties intend a non binding letter of intent, where only certain clauses — such as confidentiality or exclusivity — are enforceable. Others deliberately draft a binding letter of intent for specific terms, such as a break-up fee or an obligation to negotiate in good faith. Courts often look at the language used, the level of detail, and the parties’ conduct to decide whether an LOI is enforceable.

Beyond corporate deals, similar documents appear in hiring and admissions. A job seeker might send a letter of intent for job application to signal strong interest in a role, while an applicant might submit a letter of intent for university explaining why the program is their top choice. In these contexts, the document expresses intentions and priorities rather than detailed commercial terms.

When Do You Need a Letter of Intent?

You typically consider this document when the parties have agreed on major business terms but are not ready, or willing, to sign a full contract. In business acquisitions, a letter of intent to purchase can be useful once price, structure, and timing are broadly understood, but tax, regulatory, and detailed legal issues still require analysis. Capturing the key commercial points in writing at this stage can prevent later arguments about what was or was not promised during early calls or meetings.

In real estate, a letter of intent real estate format is commonly used when a buyer and seller (or landlord and tenant) have aligned on high-level terms — like purchase price, lease rate, or major construction obligations — but need time for inspections, financing, and zoning review. The real estate industry often relies on these documents to organize due diligence and make sure brokers, lenders, and attorneys are working from the same set of assumptions.

Other situations include a letter of intent to lease for a long-term commercial tenancy, a business acquisition letter of intent for a multi-entity transaction, or a simple expression of serious interest where external stakeholders (such as investors or regulators) want evidence that negotiations are real. In each case, the document signals that negotiations have advanced beyond casual discussions and that the parties are prepared to invest in more detailed work.

Long-tail uses also exist. Parties might exchange a letter of intent to sue or an intent to vacate letter as part of a dispute or lease termination process, although in those contexts, more formal notices are often required by statute or contract. When the stakes are high or the timing is tight, it is critical to understand whether the LOI satisfies any formal notice requirements or whether a separate, more specific notice is needed.

Related Documents

This document rarely exists in isolation. It typically fits into a larger sequence of negotiations and agreements, both before and after the final contract. Seeing it as one step in a document “journey” makes it easier to plan the right level of detail and formality.

Before this stage, parties often sign a standalone confidentiality or non-disclosure agreement so that sensitive information can be exchanged safely. During or after this stage, they may negotiate a definitive purchase agreement, lease, employment contract, or construction contract. In some transactions, regulators or lenders will review the preliminary document before authorizing further steps.

A common source of confusion is the difference between this document and a letter of interest. In employment and education, a letter of interest template is usually a one-sided expression of interest without specific deal terms, while a transaction-focused document is a two-party outline of a contemplated agreement. An employment letter of interest sample may talk about skills and motivation, whereas a transaction LOI focuses on price, scope, and conditions.

Here is how some related documents interact in practice:

What Should a Letter of Intent Include?

While there is no single mandatory format, most effective documents share similar core elements. A clear, logical structure makes it easier for everyone — including future reviewers — to see what has been agreed and what remains open.

• Identifies the parties and the proposed transaction.

  The document should name the parties (including entities and key individuals) and briefly describe the deal: asset sale, stock purchase, lease, construction project, or job offer. Clarify who is buying or selling, who will be the employer, landlord, or contractor, and the basic nature of the transaction.

  
  

• Summarizes the key business terms in plain language.

  This section spells out the commercial heart of the deal: purchase price or rent, high-level payment structure, expected start and closing dates, and any major contingencies. Stating these points clearly helps ensure that everyone is working from the same basic assumptions before legal drafting begins.

  
  

• Distinguishes binding from non-binding provisions.

  Many disputes arise because parties did not say which parts of a non binding letter of intent were actually meant to be enforceable. A clear document will mark provisions such as confidentiality, exclusivity, break-up fees, or governing law as binding (if that is the intent), and state that the rest is subject to execution of a definitive agreement.

  
  

• Addresses due diligence and information sharing.

  For acquisitions, real estate deals, or complex hiring, the document often sets out how long due diligence will last, what information will be provided, and any limits on access. These clauses help manage expectations about the workload and timing between signing the LOI and signing the final agreement.

  
  

• Covers exclusivity, standstill, or “no-shop” expectations.

  Parties sometimes agree that the seller will not solicit or negotiate with other buyers for a set period. If this is important, it should be described precisely, with clear start and end dates and any exceptions. Similar provisions can address whether either side can announce the negotiations publicly.

  
  

• Allocates responsibility for costs and advisors.

  It is often wise to clarify that each party will bear its own legal, accounting, and advisory costs unless agreed otherwise. In larger deals, the parties may include limited reimbursement or break-up fee concepts, especially where one side expects to incur unusually high upfront expenses.

  
  

• Includes basic legal housekeeping terms.

  Even at a preliminary stage, it can help to specify governing law, dispute resolution methods (for any binding clauses), and how notices under the document should be delivered. These short clauses reduce uncertainty if a disagreement arises before the definitive contract is signed.

  
  

• Uses a professional structure and closing.

  The document should end with signature blocks for each party. In some cases, a contractor sample letter of intent for construction project pdf or a real-estate-focused template provides a useful format, but you should adjust headings, numbering, and defined terms so they reflect your particular transaction.

Legal Requirements and Regulatory Context

There is no single U.S. statute that governs every aspect of this document. Instead, its legal effect flows from general contract law principles — offer, acceptance, consideration, and intent to be bound — combined with the rules that apply to the underlying transaction (corporate, real estate, securities, employment, government contracting, and so on). Modern scholarship on preliminary agreements notes that they often function as “incomplete contracts” that may still create obligations, including duties to negotiate in good faith, even when the parties label them non-binding. Academic analysis in the Texas Law Review and other sources traces how courts infer these duties from language and conduct in pre-deal documents.

In larger mergers and acquisitions, federal antitrust rules add another layer. Under the Hart–Scott–Rodino Act, parties to certain sizeable deals must submit a premerger notification and observe a waiting period before closing. The Federal Trade Commission’s guidance on premerger notification and the merger review process explains that these filings can be based on a signed preliminary agreement, including this type of document, if it contains enough detail about the proposed transaction. Recent rule changes significantly expand the information that must be submitted, meaning parties need to ensure that any preliminary document used for antitrust filings accurately reflects the structure, timing, and rationale of the deal.

For government contractors and participants in Small Business Administration programs, preliminary agreements can affect “affiliation” analysis. Under SBA’s “present effect” rule, an agreement in principle can, in some cases, be treated as evidence that one firm has the power to control another, with consequences for size status and eligibility for small-business set-asides. The SBA’s affiliation rules in 13 C.F.R. §121.103 and related guidance on small business size standards explain how ownership, management, and certain agreements can create affiliation, and commentary by government-contracts practitioners specifically warns that poorly drafted preliminary documents can unintentionally push a company over the SBA size limits.

Real estate adds further complexity. Many states’ statutes of frauds require contracts for the sale of land or long-term leases to be in writing and to contain essential terms. Courts have sometimes held that a detailed preliminary document — especially one that looks complete and is followed by performance — can satisfy these requirements and operate as a binding real-estate contract, even when the parties thought they were “only” at an outline stage. For that reason, real-estate practitioners stress the importance of expressly stating whether a property-focused preliminary agreement is binding or non-binding, and which provisions (if any) are intended to have legal effect.

Practice resources from professional organizations reinforce these themes. The Association of Corporate Counsel’s sample non-binding letter of intent and related training materials on term sheets emphasize clearly labeling binding provisions (such as confidentiality, exclusivity, and expense reimbursement) while keeping commercial terms expressly subject to definitive agreements. Taken together, these authorities illustrate that the same short preliminary document can be treated as a mere roadmap, a partially binding contract, or an enforceable deal, depending on its wording, context, and the parties’ behavior — so careful drafting and local legal advice are essential.

Common Mistakes When Drafting a Letter of Intent

Even experienced businesses and professionals can make avoidable errors when preparing this kind of preliminary document. Understanding the most common pitfalls helps you design a clearer outline and reduces the risk of accidental, unwanted commitments.

• Failing to separate binding and non-binding provisions.
  Parties sometimes say they want everything to be non-binding but then include language that looks like firm commitments to close a deal. If a dispute arises, a court could conclude that some or all of the document is enforceable. You can reduce this risk by explicitly stating which sections are binding, which are non-binding, and whether the parties intend any duty to negotiate in good faith.

  
  

• Leaving essential commercial terms too vague.
  A tentative price “to be determined” or a promise to pay “market rent” without any formula, benchmark, or range creates opportunities for misunderstanding, especially in transactions involving business assets or real estate. If a term is truly open, it is better to say so clearly and, where possible, describe how the parties will try to reach agreement (for example, by using an appraisal or agreed-upon index).

  
  

• Using the wrong tone or level of formality for the context.
  A very informal email can be inadequate for a multi-million-dollar transaction that will be reviewed by boards, regulators, or lenders. On the other hand, a job-related document that reads like a dense, heavily legalistic contract can feel inappropriate or intimidating. Matching the structure and language to the seriousness and complexity of the deal helps keep expectations realistic and relationships positive.

  
  

• Copying an old or generic template without tailoring it.
  Reusing a form from a prior deal, or a generic example found online, may leave out key issues or reflect outdated law and practice. A template written for a simple asset sale may be a poor fit for a complex development project, a construction arrangement, or a heavily regulated industry. Old documents may omit modern concerns such as data security, ESG commitments, or updated regulatory requirements.

  
  

• Ignoring how third parties will interpret the document.
  Banks, investors, merger-control authorities, or grant agencies may review the preliminary outline to understand how firm the deal is and what conditions must be met. If the document overstates certainty, or hides important contingencies, it can mislead those audiences or complicate approvals later. Taking the time to align the preliminary text with your real intentions and constraints can save significant trouble down the line.

How the AILawyer.pro Letter of Intent Template Helps

A structured template turns an abstract idea into a concrete, organized document. Instead of drafting from scratch, you move through guided sections that prompt you to describe the parties, the transaction, key business terms, and any binding provisions in a consistent way. This reduces the risk that you will forget an important point or handle it differently in separate parts of the document.

The AILawyer.pro Letter of Intent template is designed for common scenarios such as business acquisitions, commercial leases, and larger service or construction projects. You can adapt it for a straightforward letter of intent to purchase or for more specialized deals by selecting the sections you need and omitting those that do not fit. Built-in prompts remind you to clarify whether provisions like confidentiality, exclusivity, or cost-sharing are meant to be binding.

You can also use the integrated AI drafting tools to generate alternative wording, refine tone, or convert rough bullet notes into full sentences while keeping control over the substance. This combination of a structured template and AI assistance helps you work quickly without sacrificing clarity, and leaves room for your attorney to make jurisdiction-specific adjustments before signing.

Practical Tips for Completing Your Letter of Intent

Before drafting, gather the essential information: names and contact details for all parties, a concise description of the transaction, expected timing, and any non-negotiable requirements. If you are working on a larger project — such as a letter of intent for construction project pdf or a complex lease — collect basic financial terms, preliminary plans, and any regulatory constraints so that you can reference them accurately.

As you draft, start with a short introduction that explains the purpose of the document and the nature of the proposed transaction. Then describe the key business terms in plain language: price or rent ranges, payment concepts, timing, and important conditions. Avoid legal jargon unless you clearly understand its meaning, and focus on clarity over formality. When you introduce a specialized concept — such as an exclusivity period or earn-out — consider adding a brief explanation for non-lawyer readers.

Next, decide which provisions should be binding. Confidentiality, governing law, and certain process-related obligations are common candidates. Make sure the document explicitly states that all other terms are subject to negotiation and execution of a definitive agreement. If you intend to use a non binding letter of intent template or a binding letter of intent template from a prior deal, review every clause to ensure it fits your current arrangement.

For employment or education contexts, adjust the tone. A letter of intent for employment template or a letter of intent for university should emphasize mutual interest, qualifications, and high-level expectations while avoiding overly rigid promises about future employment or admissions. A short paragraph outlining next steps — such as interviews, portfolio review, or formal offer letters — can be more appropriate than detailed contractual language.

Finally, schedule time for legal review in higher-risk situations. Sharing your draft with a lawyer before you circulate it widely allows you to correct ambiguous language, align the document with your negotiation strategy, and understand any unintended consequences. This is particularly important if you are dealing with regulatory approvals, financing contingencies, or multiple jurisdictions.

Checklist Before You Sign or Use the Letter of Intent

• The parties and transaction are clearly described, with accurate names, roles, and a brief summary of what is being bought, sold, leased, or agreed.

• Key commercial terms are stated in understandable language, including price or rent concepts, timing, and major conditions or contingencies.

• Binding and non-binding provisions are clearly separated, and any clauses that must be enforceable (such as confidentiality or exclusivity) are expressly labeled.

• Regulatory, lending, or third-party requirements have been considered, including any need to share the document with investors, banks, or agencies.

• The document is consistent with other materials, such as NDAs, term sheets, or board approvals, and does not contradict prior commitments.

• A qualified attorney has reviewed the draft, especially for large, cross-border, or heavily regulated transactions.

FAQ: Common Questions About the Letter of Intent

Q: What is a letter of intent in business and real estate deals?
A: A letter of intent (LOI) is usually a short, structured document that outlines key terms of a proposed transaction — such as price, timing, and basic conditions — before a full contract is drafted. In many business acquisitions and property deals, it functions as a roadmap that shows what the parties broadly agree on, while leaving details to be finalized in definitive agreements.

Q: Is a letter of intent legally binding or just a non-binding LOI?
A: In many situations it is mostly non-binding, with only specific clauses — like confidentiality, exclusivity, or expense reimbursement — intended to be enforceable. Whether your letter of intent is binding depends on the exact wording, the level of detail, and how the parties act, so it is important to state clearly which sections (if any) are meant to have legal effect as part of a non-binding letter of intent.

Q: How do I write a letter of intent to purchase a business or assets?
A: Start by identifying the parties and the business, then outline headline terms: what is being acquired, the proposed price or price range, basic payment structure, and a target closing timeline. You can then add key conditions (due diligence, financing, approvals) and clarify whether the document is intended to be a non-binding letter of intent with only certain clauses treated as binding.

Q: What should a letter of intent to purchase real estate or lease property include?
A: It should briefly describe the property, purchase price or rent structure, deposits, inspection or due diligence periods, and major conditions such as financing or zoning approvals. A real estate letter of intent often also addresses closing dates, who pays which closing costs, and whether any parts of the document — such as exclusivity — are intended to be binding.

Q: What is the difference between a letter of intent and a letter of interest for jobs or universities?
A: A transaction-focused letter of intent usually records negotiated terms between two parties, like compensation ranges or high-level deal structure. A letter of interest template for employment or admissions is more of a one-sided pitch, where the writer explains their qualifications, goals, and interest in a role or program without detailed commercial terms.

Q: Do I still need a full contract if I sign a letter of intent template?
A: In almost all business, real estate, and construction deals, yes. The preliminary document organizes negotiations and clarifies expectations, but you will still need a detailed purchase agreement, lease, construction contract, or employment agreement before closing; a sample letter of intent or letter of intent template is a starting point, not a substitute for the final contract.

Sources and References

This article draws on general principles of U.S. contract law and public resources discussing preliminary agreements. Overviews of letters of intent and term sheets as “outline” contracts are informed by business-law guidance from LawInfo on letters of intent and term sheets and academic analysis in the Texas Law Review’s discussion of preliminary agreements.

Examples of non-binding and partially binding LOIs are supported by resources from the Association of Corporate Counsel and related materials on term sheets and pre-deal documents. Real estate-specific usage and the importance of clarifying binding intent reflect practice notes from commercial real-estate practitioners.

Regulatory references, including merger notification and small-business affiliation rules, are informed by Federal Register guidance on premerger notification requirements and commentary on the Small Business Administration’s treatment of LOIs in affiliation analyses. Readers should review current federal and state statutes and consult a local attorney for transaction-specific advice.

Get Started Today

Lock alignment early, keep momentum, and protect your interests with a crisp LOI. Download the free Letter of Intent (LOI) template, choose a state-specific version if you need to align with local legal nuances, or customize your own with our AI Generator — then have an attorney review the binding carve-outs before you sign.

State-Specific LOI Templates:
California | New York | Texas | Florida | Illinois | Washington

For more resources to help you communicate clearly and protect your position in negotiations, explore our Letters & Notices category.

Disclaimer

This article is for informational purposes only and does not constitute legal advice, a legal opinion, or a substitute for consultation with a licensed attorney. Laws and regulations vary by state and change over time, and the appropriate content and effect of any letter of intent depend on the specific facts and parties involved. You should consult a qualified lawyer in your jurisdiction before relying on any draft or template for an actual transaction.