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Real Estate Letter of Intent (LOI) (4)

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Updated on March 21st, 2023

real estate letter of intent (LOI) outlines the terms of a proposed real estate contract between a buyer or tenant and a property owner. The letter indicates the buyer/applicant’s intention to buy or lease the property and opens negotiations between the parties. By executing the document, both parties agree that they will endeavor to make a definitive contract.

Residential LOI (2)

Residential Letter of Intent to Lease – Used by lease applicants to negotiate the rental of residential property.

Download: PDF, Word (.docx), OpenDocument (.odt)


Residential Letter of Intent to Purchase – Relays the terms of purchase of residential real estate prior to the drafting of a formal contract.

Download: PDF, Word (.docx), OpenDocument (.odt)


Commercial LOI (2)

Commercial Letter of Intent to Lease– Delivered to commercial property owners to begin negotiations for the rental of the premises.

Download: PDF, Word (.docx), OpenDocument (.odt)


Commercial Letter of Intent to Purchase – Outlines a buyer’s proposal to purchase commercial real estate.

Download: PDF, Word (.docx), OpenDocument (.odt)



What’s Included

Real estate letters of intent can be used to demonstrate the interest of a buyer or future tenant looking at either a commercial or residential property. While each scenario would require terms that are specific to that particular transaction, most real estate LOIs will contain the following info:

Introductory Paragraph

An LOI is a formal letter, and should therefore begin with an introductory paragraph that sets out the subject and purpose of the document.

Identification of Buyer/Lessee and Seller/Lessor

The buyer or lessee will need to identify themselves and provide a contact where they can be easily reached by the property owner or landlord, who should also be identified.

Property and Transaction Type 

The person preparing the letter should indicate the category of real estate (“residential” or “commercial”) and type of transaction (“purchase” or “lease” of the named property).

Financial Terms

The proposed financial terms of the future agreement between the buyer/tenant and landlord need to be provided; that is, the base rent or purchase price.

Purchase or Lease Conditions

LOIs for real estate purchases will include the terms of the property transfer and conditions that must be met for the transaction to be completed. An LOI to purchase real estate often gives the buyer a period in which the seller cannot sell to or negotiate with another party.

For lease applicants, the conditions will include limits and penalties on the tenant, such as late fees, pet allowance, and the requirement of permission to sublet. If furniture, appliances, or parking is provided, they can also be specified.


Although most LOI terms aren’t binding, having both parties sign the document affirms their commitment to reaching an agreement. For an LOI to purchase real estate, it is especially important to obtain the seller’s signature because it will hold them accountable to proceed in good faith negotiations, and can prevent them from entertaining other buyers during the letter’s negotiation window.


Download: PDFWord (.docx)OpenDocument


Date: [DATE]



RE: Intent to Buy/Lease Property

This Letter of Intent (the “Letter”) sets forth the proposed terms and conditions of the Transaction described hereunder and shall govern the relationship between the Buyer/Lessee and Seller/Lessor (the “Parties”) until replaced by a definitive, formal agreement addressing the same transaction and subject matter (the “Definitive Agreement”). The Transaction considered in this Letter and in the Definitive Agreement is subject in all respects to the following:

Please note: Any sections that do not apply may be struck through or deleted.

1. THE BUYER OR LESSEE. [BUYER/LESSEE NAME] (the “Buyer” or “Lessee”) with a mailing address of [BUYER/LESSEE MAILING ADDRESS] and a phone number of [BUYER/LESSEE PHONE #].

2. THE SELLER OR LESSOR. [SELLER/LESSOR NAME] (the “Seller” or “Lessor”) with a mailing address of [SELLER/LESSOR MAILING ADDRESS].

3. PROPERTY. [PROPERTY ADDRESS] (the “Property”). The Property is defined as a commercial residential space.

4. TRANSACTION. This Letter is for the purchase lease of the Property (the “Transaction”).

5. FINANCIAL TERMS. The Buyer or Lessee intends to: (check one)

– Purchase the Property for $[AMOUNT] (the “Purchase Price”).

– Lease the Property for $[AMOUNT] (the”Rent”) per month. The Rent shall be due on the [RENT DUE DATE] day of each month (the “Due Date”).

6. FINANCING. The Buyer or Lessor has made it known this Letter is: (check one)

Conditional Upon Financing. This Letter is conditional on the Buyer’s ability to obtain financing. Financing shall be under the following terms: [CONDITIONAL TERMS].

NOT Conditional Upon Financing. This Letter is not conditional on the Buyer’s ability to obtain financing.

7. PURCHASE CONDITIONS. If the Transaction is for the purchase of the Property, the following conditions shall apply:

  1. CLOSING. The Closing shall occur on [DATE] (the “Closing”). Any change of date for the Closing must be agreed upon in writing by both Parties.
  2. CLOSING COSTS. All costs associated with the Closing shall be the responsibility of (check one) the Buyer the Seller the Parties each bearing their own expenses.
  3. POSSESSION. Possession of the Property shall be given on [DATE] (the “Possession”). Any change of date for the Possession must be agreed upon in writing by the Buyer and Seller.
  4. PROPERTY INSPECTION. Following the creation of a formal Purchase Agreement, the Buyer shall hold the right to have the Property inspected by a person of their choosing. The inspection shall occur no later than [#] days after a Purchase Agreement has been created.
  5. DISCLOSURES. Following the Property inspection, the Buyer shall have an additional [#] days to report any new disclosures to the Seller in writing. If the Parties cannot reach an agreement within [#] days after delivery of the written disclosures, the Purchase Agreement shall be terminated with any earnest money being returned to the Buyer.
  6. STANDSTILL AGREEMENT. Following the execution of this Letter, and until Closing, the Seller shall not negotiate for the sale of the Property with any other party unless either the Parties agree in writing to terminate this Letter, or the Parties fail to sign a Purchase Agreement by [DATE].

8. LEASE CONDITIONS. If the Transaction is for the lease of the Property, the following conditions shall apply:

  1. LATE FEE. If Rent is not paid by the Due Date, the Lessee will be charged a late fee of $[AMOUNT] until the overdue amount is paid.
  2. DEPOSIT. A security deposit in the amount of $[AMOUNT] shall be due prior to or upon the signing of a lease.
  3. SUBLETTING. The Lessee cannot sublet the Property without first obtaining the prior written consent of the Lessor.
  4. FURNITURE AND APPLIANCES. The Lessor shall supply the following furniture and appliances on the Premises for the Lessee’s use: [LIST FURNITURE & APPLIANCES]
  5. PARKING. The Lessor shall: (check one) Provide [#] parking space(s) to the Lessee for a fee of $[AMOUNT]. This amount shall be paid to the Lessor on a monthly basis in addition to the Rent. Not provide parking.
  6. PETS. The Lessee shall have the right to [#] pet(s) on the Property. The following types of pets are allowed: [TYPES OF PETS].

9. EXPENSES. If the Transaction is for the lease of the Property, the Lessee shall be required to pay the following monthly expenses in addition to the Rent:


10. INTENTION OF THE PARTIES. This Letter sets forth the intentions of the Parties to use reasonable efforts to negotiate, in good faith, a Definitive Agreement with respect to all matters herein. Notwithstanding paragraphs 6 through 12, which shall be legally binding, any legal obligations with respect to all other matters shall only arise if and when the Parties execute and deliver a Definitive Agreement.

11. GOVERNING LAW. This Letter shall be governed under the laws of the State of [STATE NAME].


Seller/Lessor Signature: ____________________________

Buyer/Lessee Signature: ____________________________

How It’s Used

Generally speaking, the purpose of a real estate LOI is for a buyer, lease applicant, or their broker to make an offer to buy or lease property. An LOI is less binding than a formal agreement, allowing more room for negotiation and backing out.

LOI to Purchase Property

An LOI to purchase real estate is often drafted by the buyer following a viewing of the property and a discussion of terms with the seller. Once the letter has been delivered to the seller, the parties can negotiate and the buyer can clarify terms as needed. When both parties agree to the basic terms of the revised letter, they will sign the document and draft a purchase agreement.

Depending on the nature and value of the transactions, the parties may want to hire legal help to look over and negotiate the final agreement. If all purchase conditions are followed and both parties reach a final agreement, the transaction will take place and the property will be transferred to the buyer.

LOI to Lease Property

The process surrounding a letter of intent to lease property is similar to one to purchase real estate. The lease applicant will usually view the property and agree on basic terms. If they’re interested, they’ll draft their letter of intent and deliver it to the landlord. The applicant may be required to complete a rental application form and background check to be considered for the lease.

If both parties sign the LOI, it means they agree on the future lease terms and will likely move forward in drafting the final contract. There may be an inspection period, especially for commercial leases.

Benefits of a Letter of Intent

A real estate LOI is not a required step in the process of purchasing or leasing property. However, there are several benefits for both parties that make drafting an LOI worthwhile, including:

  1. Affirms the Buyer/Lessee’s Intentions – By presenting the owner with a LOI that relays the fundamental terms of the proposed purchase contract or lease, the buyer/lessee will likely be taken more seriously than other interested parties.
  2. Establishes the Terms of a Future Agreement – An LOI relays the fundamental terms of the proposed agreement, such as the purchase or rental price, time frame for reaching an agreement, and any contingencies for a contract to be finalized. 
  3. Speeds Up the Negotiations – An LOI can speed up the process by allowing the parties to negotiate and amend terms prior to the signing a binding agreement.
  4. Mitigates Risk – By setting out the terms of the purchase or rental agreement prior to its creation, both parties will avoid most disputes.
  5. Minimizes Legal Fees – Because the letter is mostly non-binding, the parties can negotiate and revise the letter without legal involvement or repercussions.

Frequently Asked Questions

Is a real estate letter of intent legally binding?

In most cases, a letter of intent isn’t legally binding. However, depending on the structure of the letter, including its terms and any paid consideration, it may be found to be legally binding by a court of law. Generally, the letter will include a clause that specifies if the letter is binding or non-binding.

Can a letter of intent be terminated?

Yes. A letter of intent can be terminated in writing by either party at any time prior to the signing of a formal agreement.