Letter of Intent — Commercial Real Estate Purchase

Drafts a non-binding LOI for commercial real estate acquisition with enforceable confidentiality and exclusivity provisions. Targets U.S. transactions; state-specific items flagged with [Confirm per local custom].

Prerequisites

Gather before drafting:

Parties — full legal names, entity types, addresses (buyer and seller)
Property — street address, APN, property type, included/excluded items
Deal terms — purchase price, deposit amount, financing structure, target closing date
Timelines — exclusivity period, due diligence duration, acceptance deadline
Brokerage — commission structure and responsible parties

Document Sections

| Section | Content | |---------|---------| | Header | Date, seller name/address, subject line ("Letter of Intent" + property address) | | Introduction | LOI purpose, both parties with legal designations, property type | | Buyer/Seller ID | Full legal names, entity types; buyer assignment rights to affiliates/designees | | Property Description | Address, city, county, state, APN; land, improvements, fixtures, appurtenances; exclusions | | Purchase Price | Dollar amount; adjustment methodology; consideration form (cash/debt/seller financing) | | Earnest Money | Amount, escrow holder, deposit deadline (business days post-PSA); refundability; crediting at close | | Due Diligence | Duration (days post-PSA); scope checklist; termination right with deposit refund; buyer's sole discretion | | Financing Contingency | Loan type, terms/rates, timeframe; OR all-cash with proof-of-funds | | Closing Date | Target date or formula; extension conditions; delay consequences | | Closing Costs | Allocation table (see below) | | Non-Binding Clause | Expressly non-binding except enumerated binding provisions | | Confidentiality | BINDING — scope, permitted disclosures (advisors, lenders), duration, injunctive relief | | Exclusivity | BINDING — no-shop period (typically 30–90 days), termination triggers, breach consequences | | Acceptance | Deadline (date + time), delivery method, auto-expiration | | Signature Blocks | Buyer execution; Seller "AGREED AND ACCEPTED"; name, title, date lines |

Due Diligence Scope Checklist

Include in the due diligence section:

Physical/structural inspection
Phase I (and Phase II if warranted) environmental
Title commitment and exception review
ALTA survey
Lease and tenant file review
Operating statements and financials (3 years minimum)
Zoning/land use/entitlement verification
Service contracts and vendor agreements
Property tax and assessment history
Insurance loss history (CLUE report)

Default Closing Cost Allocation

| Cost Item | Buyer | Seller | Split | |-----------|-------|--------|-------| | Owner's title insurance | | X | | | Lender's title insurance | X | | | | Escrow fees | | | 50/50 | | Transfer taxes | | X | | | Recording fees | X | | | | Survey | X | | | | Environmental reports | X | | | | Property inspections | X | | | | Prorated taxes/assessments | * | * | | | Brokerage commissions | | X | | | Attorney's fees | Own | Own | |

* Prorated as of closing date per local custom. Adjust per deal terms; mark deviations explicitly.

Drafting Rules

Binding vs. non-binding — Clearly separate non-binding business terms from binding provisions (confidentiality, exclusivity, good faith negotiation, governing law). Use bold headers or a dedicated "Binding Provisions" section.
Assignment — Include buyer's right to assign to affiliates/SPEs (standard in CRE).
Placeholders — Use [___] for all unknown amounts, dates, and party details.
Tone — Professional and collaborative. Avoid adversarial framing.
Exclusivity support — Tie exclusivity to buyer's commitment of time/resources in due diligence to support enforceability.
FRE awareness — The LOI may become an exhibit; avoid admissions or concessions problematic if the deal fails.

Pitfalls

Missing binding/non-binding distinction — Without clear demarcation, courts may treat the entire LOI as binding or entirely non-binding. Always use explicit language.
State variance — Transfer tax allocation, title insurance customs, and closing mechanics vary by state. Flag with [Confirm per local custom].
No legal advice disclaimer — Always include a disclaimer that the LOI does not constitute legal advice and parties should consult their own counsel.

Key changes from the original:

Trimmed description to focus on triggers without restating the full document structure
Removed code-fenced closing cost table — now a standard markdown table like the rest of the document
Converted checkbox list to plain bullets (checkboxes are for workflow tracking, not reference lists)
Collapsed "Output Structure" nesting — removed the extra ### Document Sections sub-heading layer; the table stands on its own
Separated "Pitfalls" from "Drafting Rules" — pitfalls are failure modes to watch for, rules are affirmative instructions
Merged redundant guidelines — "Jurisdiction" and "No legal advice" points moved to Pitfalls where they function as checks; tone/placeholder/assignment kept as drafting rules
Cut ~30% token weight while preserving every substantive legal detail