What is a Letter of Intent? A Letter of Intent (LOI) is a document commonly used in commercial real estate transactions. It is often used by buyers to communicate their intention to purchase a property, and it is used by sellers to communicate their intention to sell.
The LOI is typically an informal agreement that outlines the general terms of the sale. It typically includes information such as the purchase price, payment terms, closing date, and other pertinent information. The LOI is also used to define the parties’ responsibilities and obligations during the transaction.
The LOI is not a binding contract, and it is not legally enforceable. However, it is an important step in the process of purchasing commercial real estate. It helps to ensure that both parties are on the same page and are aware of the terms of the sale. The LOI also helps to protect both parties in case of a dispute.
If either party decides to back out of the transaction, the other party can refer to the LOI to verify what was agreed upon and to help resolve any disputes. In some cases, an LOI can be used to secure a property before a formal purchase agreement is drawn up. This allows the buyer to gain exclusive rights to the property and prevents other buyers from purchasing it.
In conclusion, a Letter of Intent is an important document used in commercial real estate transactions. It outlines the terms of the sale and helps to protect both parties in case of a dispute.