Real Estate Letter of Intent Template
Contributor
Reviewed ByAdam Ramirez, J.D.
Editor
Generate a professional LOI for any real estate transaction - residential homes, commercial properties, or undeveloped land. Covers purchase price, earnest money, financing terms, inspection and appraisal contingencies, title provisions, and binding confidentiality clauses. Built on the binding/non-binding framework recognized in Empro Mfg. v. Ball-Co, 870 F.2d 423 (7th Cir. 1989) and compliant with Statute of Frauds requirements. Customized for your state's real estate laws. Ready to deliver in minutes.
Trusted by buyers, investors, and real estate professionals nationwide
- 9
- Steps
- 50
- States Covered
- 2026
- Updated
Summary
- A real estate letter of intent often starts a property transaction
- The letter may memorialize any terms agreed upon
- It will also set out any contingencies for the transaction
The process of buying or leasing commercial or residential real estate is long and complex. A real estate letter of intent protects both parties while negotiating and formalizing a purchase or lease.
What Is a Real Estate Letter of Intent?
A real estate letter of intent usually contains an offer to buy or lease and seeks verification of the landowner’s interest at that price. A real estate letter of intent is often referred to as an “agreement to agree.” However, this description is slightly misleading because it can include enforceable terms, such as a non-disclosure agreement.
When and Why to Use One
Letters of intent protect both parties while exploring a real estate transaction. The letter of intent commits the parties to work in good faith to complete the sale or lease. This does not mean the parties must complete a transaction. However, it sets out the steps that each expects to occur and the contingencies that must be satisfied to complete it.
Key Terms to Include
A real estate letter of intent usually serves three purposes. First, it sets out the offer. A landowner who accepts the letter of intent does not necessarily accept the offer. However, this offer sets the stage for future negotiations.
Second, the letter memorializes any terms the parties have agreed upon. For example, the letter may contain an exclusive negotiation clause. If a seller uses a buyer’s offer to solicit other offers, they may have breached that clause.
Third, the letter describes any contingencies for the offer. Common contingencies in a purchase transaction require the buyer to secure financing and the seller to pass a property inspection.
How to Write One
You will identify both parties, the property and the proposed transaction. You will often describe any terms to be negotiated. For example, in a commercial lease letter of intent, these terms may include the lease term and renewal options. The letter of intent will lay out the process for proceeding, including any due diligence to be performed.
Binding vs. Non-Binding Terms
A letter of intent does not obligate the parties to complete the property transaction. Thus, the letter of intent will usually explicitly state that it is non-binding. However, other terms, such as confidentiality and exclusive negotiating clauses, may be binding.
How It Differs From a Purchase Agreement
A lease or purchase agreement is the binding contract that consummates a property transaction. A real estate letter of intent simply confirms interest and starts the negotiations and due diligence.
Mistakes That Cost You the Deal
The biggest mistake that could cost you a deal and open you to a lawsuit is to violate any binding terms in a real estate letter of intent, such as the exclusive negotiation clause. Another common mistake is to act in bad faith by using the letter of intent to leverage other offers.
Find the Right Real Estate Letter of Intent for Your Transaction
The correct letter of intent will ensure you protect yourself during a real estate transaction. Use ConsumerShield’s guides and templates to find the right letter for your situation.
Business Law Knowledge Base
No topics match your search.
Support
Frequently Asked Questions
Everything you need to know about our real estate letter of intent
A real estate letter of intent is a preliminary document from a buyer to a seller that outlines the proposed terms of a property transaction. It covers the purchase price, earnest money, financing method, contingencies, closing date, and other key terms. The LOI is generally non-binding except for specific provisions such as confidentiality and governing law that are designated as binding.
The LOI itself is non-binding, meaning neither party is obligated to complete the purchase. However, certain provisions are expressly designated as legally binding - typically confidentiality, exclusivity or no-shop, and governing law. A binding obligation to purchase or sell arises only when both parties execute a definitive Purchase and Sale Agreement.
At minimum, include inspection, appraisal, and title contingencies. For commercial properties and land, add environmental assessment. For pre-1978 properties, lead-based paint disclosure is federally required. Each contingency gives you the right to exit the deal and recover your earnest money if the condition is not met.
Yes. This LOI supports single-family residential, multi-family, commercial, industrial, land, and mixed-use property types. The form adapts based on your property type selection. For complex commercial deals with lease terms, CAM charges, or tenant improvements, consult a commercial real estate attorney. If you are leasing commercial space rather than buying it, use a commercial lease letter of intent instead.
After both parties sign the LOI, the next step is drafting a formal Purchase and Sale Agreement. The LOI terms serve as the starting point for the agreement. The contingency periods begin after the purchase agreement is executed, not after the LOI is signed. If the parties cannot reach agreement on the definitive contract, either side can still walk away.
References
Resources
Explore related articles and sources cited on this page.
- "Why Should I Use a Commercial Letter of Intent?" Virginia Realtors, 28 Dec 2023. https://virginiarealtors.org/2023/12/28/why-should-i-use-a-commercial-letter-of-intent/.
- "Leveraging Letters of Intent in Commercial Real Estate." CREW Network. https://crewnetwork.org/resources/gender-diversity-research/industry-brief/leveraging-letters-of-intent-in-commercial-real-estate.
ConsumerShield Premium
Unlimited legal forms and guide unlocks.
Prefer monthly? $19.99/mo — choose at checkout.
- Unlimited legal-form generation while active
- Unlimited guide unlocks across every available state
- Completed PDFs stay in your library
- Best for frequent document and guide work
Everything included
- Unlimited legal-form generation while active
- Unlimited guide unlocks across every available state
- Completed PDFs stay in your library
- Best for frequent document and guide work
Subscribe
$199.99/yrSave $39.89 vs monthly ·
Subscribe & save
Real Estate Letter of Intent