Commercial Real Estate Purchase LOI

Proposes deal terms and a negotiation framework for commercial property acquisition while limiting binding effect to specified provisions only.

Gather Before Drafting

Parties — legal names, entity types, authority, notice addresses.
Property — street address, county/state, APN(s), included/excluded assets.
Economics — price, consideration type, deposit amount and timing, financing posture.
Timeline — due-diligence period, PSA target, closing target.
Binding scope — confidentiality terms, exclusivity window, expense allocation, governing law.

Document Structure

Header & Intro

Date, seller name/address, subject line: "Letter of Intent – [Property Address/Name]".
Identify buyer, seller, property, and intended transaction.
State non-binding nature except specified sections.

Core Terms

| Term | Instruction | Placeholder | |---|---|---| | Buyer | Full legal name; allow assignment to affiliate/SPE if intended | [Buyer Legal Name] | | Seller | Full legal name; confirm record title holder(s) | [Seller Legal Name] | | Property | Address, county, state, APN(s), improvements, fixtures | [Property Description] | | Purchase Price | Fixed or adjustable; state adjustment method | [Price] | | Consideration | Cash, debt assumption, seller financing, or mix | [Consideration] | | Earnest Money | Amount, timing after PSA, escrow holder, refundability triggers | [Deposit Terms] | | Due Diligence | Days from PSA; scope; buyer discretion; termination right | [DD Period/Scope] | | Financing | Contingent or cash; proof of funds/commitment | [Financing Terms] | | Closing | Target date or days after contingencies; extensions | [Closing Date] | | Closing Costs | Allocation of title, escrow, taxes, surveys, fees | [Cost Allocation] |

Due-Diligence Scope Checklist

Physical inspections and access rules
Environmental review and reports
Title commitment, exceptions, survey
Leases, rent roll, tenant files, estoppels
Operating statements and expense history
Zoning, permitted use, compliance records
Service contracts and vendor agreements

Binding Provisions Block

Create a discrete section titled "Binding Provisions" expressly stating these terms bind while all others do not.

| Item | Required Elements | |---|---| | Confidentiality | Scope, permitted disclosures, duration, exclusions, remedies | | Exclusivity | Start, duration, prohibited activities, breach consequences | | Expenses | Each side bears own costs (or seller reimburses on breach) | | Governing Law | State law and venue for binding provisions only |

Acceptance Block

Acceptance deadline (date/time, delivery method).
Buyer signature block (name/title/date).
Seller block labeled "Agreed and Accepted" (name/title/date).

Optional Clauses (include only if provided)

| Clause | When | |---|---| | Tenant Estoppels / SNDA | Multi-tenant or credit-sensitive deals | | PSA Milestones | Staged diligence or deposit increases | | Risk Allocation | Casualty/condemnation between LOI and closing | | Broker Commission | Broker involved or allocation disputes anticipated |

Pitfalls & Checks

Restate non-binding status both in the intro and immediately before signature blocks.
Isolate binding sections; add a severability sentence for those sections only.
Avoid "agreement to agree" language unless expressly intended.
Do not include good-faith negotiation obligations unless the client accepts that exposure.
Use specific dates and dollar amounts; bracket unknowns with [placeholder].
Verify compliance with local transfer-tax and escrow customs.
If seller is not the record owner, require evidence of authority to sell.