Commercial Real Estate Letter of Intent Template

Commercial Real Estate Letter of Intent Template

[Buyer Name or Buyer Legal Entity]
[Street Address]
[City, State/Province, ZIP/Postal Code, Country]
Phone: [Buyer Phone Number]
Email: [Buyer Email Address]

[Date]

[Seller Name or Seller Legal Entity]
[Street Address]
[City, State/Province, ZIP/Postal Code, Country]

Re: Commercial Real Estate Letter of Intent – [Property Address or Description]

Dear [Seller Contact Name or “Sir/Madam”],

This Commercial Real Estate Letter of Intent (“LOI”) sets forth certain preliminary terms and conditions under which [Buyer Legal Name] (“Buyer”) proposes to purchase from [Seller Legal Name] (“Seller”) the commercial property described below (the “Property”). Except as expressly stated in Section 11 (Binding and Non-Binding Provisions), this LOI is intended as a non-binding outline of key terms and a basis for preparing a formal purchase and sale agreement (the “Definitive Agreement”).

1. Parties and Property

1.1 Buyer
Buyer Name: [Buyer Legal Name]
Entity Type: [Individual / Corporation / LLC / Partnership / Other]
Buyer Address: [Buyer Address]

1.2 Seller
Seller Name: [Seller Legal Name]
Entity Type: [Individual / Corporation / LLC / Partnership / Other]
Seller Address: [Seller Address]

1.3 Property
Street Address: [Property Street Address]
City, State/Province, ZIP/Postal Code, Country: [City, State/Province, ZIP/Postal Code, Country]
Legal Description (if known): [Legal Description]
Property Type: [Office / Retail / Industrial / Mixed-Use / Land / Other]

2. Purchase Price and Payment Terms

2.1 Purchase Price
The total purchase price for the Property is expected to be:

Purchase Price: [Currency and Amount]

2.2 Payment Terms
The Purchase Price is expected to be paid as follows:

• Earnest Money Deposit: [Currency and Amount] (see Section 3).

• Balance of Purchase Price: [Currency and Amount] payable at closing in immediately available funds, subject to adjustments and prorations described in the Definitive Agreement.

3. Earnest Money Deposit

3.1 Deposit and Escrow
Within [Number] business days after execution of the Definitive Agreement, Buyer will deposit the earnest money described above (the “Earnest Money”) with:

Escrow Agent / Title Company: [Escrow Agent or Title Company Name]
Address: [Escrow Agent or Title Company Address]

3.2 Treatment of Earnest Money
The Earnest Money will be held in escrow and applied to the Purchase Price at closing or disbursed as provided in the Definitive Agreement if the transaction does not close.

4. Existing Leases, Income, and Operating Information

If the Property is income-producing or occupied:

• Seller will provide Buyer with copies of existing leases, amendments, rent rolls, and records of tenant security deposits.

• The purchase will include Seller’s interest in leases, rents, and tenant security deposits, all as further described in the Definitive Agreement.

Buyer’s obligations will be subject to its review and approval of the leases, rent rolls, and operating information during the due diligence period.

5. Due Diligence and Inspections

5.1 Due Diligence Period
Buyer will have a due diligence period of [Number] days (the “Due Diligence Period”) starting on the effective date of the Definitive Agreement to inspect the Property and review information.

5.2 Access to Property
During the Due Diligence Period, Seller will provide Buyer and Buyer’s inspectors, surveyors, engineers, lenders, and advisors with reasonable access to the Property at reasonable times upon prior notice, subject to tenant rights and safety requirements.

5.3 Documents and Information
Within [Number] days after the effective date of the Definitive Agreement, Seller will provide available information relating to the Property, including:

• Title reports or policies.

• Existing surveys and site plans.

• Leases, rent rolls, and related correspondence.

• Service, management, and maintenance contracts.

• Operating statements and expense records for a reasonable historical period.

• Real estate tax bills and assessments.

• Environmental reports and permits (if any).

6. Contingencies

Buyer’s obligation to close will be subject to customary contingencies to be fully described in the Definitive Agreement. These are expected to include:

6.1 Inspection Contingency
Buyer’s satisfaction with the physical condition and suitability of the Property, including building structure, systems, and site conditions, based on inspections during the Due Diligence Period.

6.2 Title and Survey Contingency
Buyer’s approval of title to the Property and any updated survey, including the ability to obtain an owner’s title insurance policy with only permitted exceptions.

6.3 Environmental Contingency
Buyer’s satisfaction with environmental reports and conditions at the Property.

6.4 Financing Contingency (If Applicable)
Buyer’s ability to obtain financing in at least the amount and on terms described in the Definitive Agreement within a specified period.

6.5 Lease and Income Contingency (If Applicable)
Buyer’s approval of the leases, rent rolls, tenant estoppel certificates, and operating statements.

7. Closing and Closing Costs

7.1 Target Closing Date
Subject to satisfaction or waiver of the contingencies described above, closing of the purchase and sale (the “Closing”) is expected to take place on or about:

Target Closing Date: [Target Closing Date]

7.2 Location and Method of Closing
Closing may occur at the offices of the Escrow Agent, at a closing attorney’s office, or by mail or electronic exchange of documents, as agreed by Buyer and Seller.

7.3 Closing Costs and Prorations
The parties anticipate that closing costs will be allocated as follows, subject to local practice and the Definitive Agreement:

• Seller to pay: [Items, such as transfer taxes, Seller’s share of escrow or closing fees, broker commissions].

• Buyer to pay: [Items, such as Buyer’s share of escrow or closing fees, title insurance premiums, recording fees, lender fees].

Rents, operating expenses reimbursements, real estate taxes, common area maintenance reimbursements, and utilities are expected to be prorated as of the Closing Date. Tenant security deposits and prepaid rents will be handled as described in the Definitive Agreement.

8. Brokers and Commissions

Buyer is represented by: [Buyer’s Broker Name or “None”]
Seller is represented by: [Seller’s Broker Name or “None”]

Responsibility for any brokerage or commission amounts will be clarified in the Definitive Agreement or separate written agreements with the brokers involved.

9. Confidentiality and Publicity

Buyer and Seller will keep the terms of this LOI and any non-public information exchanged regarding the Property confidential, except as required by law or as needed to share with internal decision-makers, lenders, or professional advisors who are subject to confidentiality obligations.

No public announcement or press release regarding this LOI or the proposed transaction will be made without the other party’s consent, except where required by law or regulation.

10. Preparation of Definitive Agreement

Buyer or Buyer’s counsel will prepare a draft of the Definitive Agreement reflecting the terms of this LOI, as modified by subsequent negotiations.

Buyer and Seller will use commercially reasonable efforts to negotiate and finalize the Definitive Agreement within [Number] days after the date this LOI is fully signed, or within another period agreed in writing. The transaction will not be legally binding until the Definitive Agreement is signed by both Buyer and Seller, except for the Binding Provisions described below.

11. Binding and Non-Binding Provisions

11.1 Non-Binding Terms
Except as expressly stated in Section 11.2, this LOI is a statement of current intentions only and does not create a binding obligation to buy or sell the Property, to sign the Definitive Agreement, or to complete the transaction. Either party may discontinue negotiations at any time, subject to the Binding Provisions.

11.2 Binding Provisions
The parties intend that the following provisions will be legally binding once this LOI is signed and delivered by both Buyer and Seller:

• The confidentiality obligations in Section 9.

• Any exclusivity or “no-shop” obligations that the parties choose to include in this Section 11.2.

• The governing law and dispute resolution provisions in Section 12.

• This Section 11.2 itself.

[Optional Exclusivity: “For a period of [Number] days from the date of Seller’s signature below (the ‘Exclusivity Period’), Seller will not enter into a binding agreement to sell the Property to any other party.”]

All other provisions of this LOI are non-binding and may be modified, supplemented, or omitted in the Definitive Agreement.

12. Governing Law and Dispute Resolution

This LOI (to the extent of the Binding Provisions) will be governed by and construed in accordance with the laws of:

Governing Law: [State/Province, Country]

Any dispute arising out of the Binding Provisions of this LOI will be resolved in:

Dispute Resolution Forum: [Court or Arbitration Forum and Location]

13. Expiration

If this LOI is not signed by both Buyer and Seller on or before:

Expiration Date: [Expiration Date]

it will expire and have no further effect unless extended or renewed in writing by both parties.

14. Signatures

If the terms of this LOI are acceptable as a basis for preparing the Definitive Agreement, please sign below to indicate your agreement to the Binding Provisions in Sections 9, 11, and 12 and your agreement in principle to the non-binding business terms described above.

Buyer

[Buyer Legal Name]

By: _______________________________
Name: [Authorized Signatory Name]
Title: [Title]
Date: [Date]

Seller

[Seller Legal Name]

By: _______________________________
Name: [Authorized Signatory Name]
Title: [Title]
Date: [Date]