Commercial real estate letter of intent (LOI) template
A commercial real estate letter of intent (LOI) is a short, mostly non-binding document that sets out the key business terms of a deal — price, deposit, due diligence, closing and the main contingencies — before lawyers draft the binding contract. It is the written handshake that confirms both sides are aligned, so nobody spends legal fees negotiating a purchase and sale agreement on a deal that was never really agreed. A good LOI is one to three pages. Below is a free, copy-ready purchase LOI template and a clause-by-clause guide for both purchase and lease deals.
The five layers every LOI covers
- Identity — who and what: the buyer and seller entities, the property address, and the area being sold or leased.
- Money — price and deposit: the purchase price (or rent), the earnest money, and how and when it is paid.
- Time — the schedule: the due diligence period, the closing date, and the exclusivity window.
- Risk — the contingencies: financing, inspection and environmental review, title, and any assignment right that lets either side walk if conditions are not met.
- Pressure — the guardrails: an expiration date so the offer cannot sit open, plus binding confidentiality.
Free CRE LOI template (purchase)
Copy the block below and replace every [bracketed placeholder] with your deal's details. It is a realistic purchase LOI with the clauses a counterparty will expect to see. For a lease LOI, swap the purchase terms (price, earnest money, closing) for rent, term, tenant improvement (TI) allowance, free rent and renewal options — the structure and the binding/non-binding split stay the same.
[Date]
[Seller Name / Entity]
[Seller Address]
Re: Letter of Intent to Purchase — [Property Address]
Dear [Seller Contact],
This letter of intent ("LOI") sets out the principal terms on which
[Buyer Entity] ("Buyer") proposes to purchase the property described below
from [Seller Entity] ("Seller"). Except for the sections expressly stated to
be binding, this LOI is non-binding and is intended only as a basis for
negotiating a definitive Purchase and Sale Agreement ("PSA").
1. PROPERTY. The real property located at [Property Address], together with
all improvements and appurtenant rights, comprising approximately
[Building Area] sq ft on approximately [Land Area] of land, parcel/title
reference [Parcel or Title Number] (the "Property").
2. PURCHASE PRICE. The purchase price is [Purchase Price]
(US$[Purchase Price Numeric]), payable in cash at closing.
3. EARNEST MONEY. Within [Number] business days of mutual execution of the
PSA, Buyer will deposit [Earnest Money] into escrow with [Escrow Agent].
The deposit is refundable during the Due Diligence Period and becomes
non-refundable (but applicable to the purchase price) thereafter.
4. DUE DILIGENCE PERIOD. Buyer will have [Due Diligence Period] days from the
effective date of the PSA to inspect the Property and review title,
survey, leases, financials, and environmental condition. Buyer may
terminate for any reason during this period and receive a full refund of
the deposit. The period begins once Seller delivers the documents listed
in the PSA.
5. CLOSING. Closing will occur on or before [Closing Date], or within
[Number] days after expiry of the Due Diligence Period, whichever is later.
6. FINANCING CONTINGENCY. This transaction is [contingent / not contingent]
on Buyer obtaining financing on terms acceptable to Buyer within
[Financing Contingency] days of the effective date.
7. INSPECTION & ENVIRONMENTAL. Closing is contingent on Buyer's satisfaction
with physical inspection and a Phase I environmental assessment of the
Property.
8. TITLE. Seller will convey marketable, insurable title free of liens and
encumbrances other than those approved by Buyer during due diligence.
9. ASSIGNMENT. Buyer may assign its rights under the PSA to an affiliate or
a single-purpose entity it controls, without Seller's consent.
10. CLOSING COSTS. Each party pays its own attorneys' fees. Other closing
costs (transfer taxes, title insurance, escrow fees) are allocated per
local custom or as set out in the PSA.
11. BROKERAGE. [Buyer / Seller] is represented by [Broker Name]. Commissions
are payable per separate agreement and are the responsibility of [Party].
12. EXCLUSIVITY (BINDING). For [Exclusivity] days from the date Seller signs
below, Seller will not market the Property to, or negotiate with, any
other party. This Section 12 is binding.
13. CONFIDENTIALITY (BINDING). The parties will keep the terms of this LOI and
all information exchanged confidential. This Section 13 is binding.
14. GOVERNING LAW (BINDING). This LOI is governed by the laws of [State].
15. EXPIRATION. This LOI expires if not accepted by [Seller] by
[Expiration] ([Time]), after which it is withdrawn.
Except for Sections 12, 13 and 14, this LOI is non-binding and creates no
obligation to proceed until a definitive PSA is executed by both parties.
Agreed and accepted:
____________________________ ____________________________
[Buyer Entity] [Seller Entity]
By: [Name, Title] By: [Name, Title]
Date: ________________ Date: ________________This template is for information only and is not legal advice — have counsel review any LOI before sending.
Clause-by-clause guide
The structure above maps onto six things you have to get right. Here is what to put in each, and where deals come unstuck.
1. Parties & property
Name the actual contracting entities — not the individuals — and give the full address plus a parcel or title reference. State the approximate building and land area. The single most common reason an LOI fails to convert into a contract is ambiguity here: the buyer thought a yard or a mezzanine was included, the seller did not. If the entity buying is a not-yet-formed SPE, say so and pair it with the assignment clause so the deal can land in the right vehicle.
2. Price & earnest money
State the price in words and figures, then the earnest money: the amount, when it is paid, who holds it in escrow, and — critically — whether it is refundable during due diligence and when it goes hard (non-refundable). Sellers push to make the deposit hard early; buyers want it refundable until they have inspected. Pitfall: leaving "refundable" silent. If the LOI does not say, you will argue about it later. For a lease LOI this section becomes base rent (per sq ft or per month), the rent commencement date, free rent, and the security deposit.
3. Due diligence & closing
Define the due diligence period in days and, importantly, when the clock starts — usually only once the seller delivers the agreed document package (leases, rent roll, financials, title, survey, service contracts). Tie closing to the later of a fixed date or a number of days after due diligence ends, so a slow seller delivery does not crush the buyer's review window. Pitfall: a closing date with no link to due diligence, which forces the buyer to either close blind or default.
4. Contingencies — financing, inspection, assignment
Contingencies are the conditions that let a party walk without penalty. The common three: a financing contingency (or a clear statement that the offer is all-cash and not contingent — sellers value certainty), a satisfactory inspection and Phase I environmental contingency, and clear title. Add an assignment right if you need to move the deal into an affiliate or SPE. Pitfall: leaving a contingency vague ("subject to satisfactory financing" with no deadline) — it reads as an option to walk at any time and a sophisticated seller will strike it.
5. Exclusivity (no-shop)
The exclusivity, or no-shop, clause is the buyer's protection for the money it is about to spend on inspections and legal drafting: for a set number of days the seller agrees not to market the property or negotiate with anyone else. Make this clause explicitly binding — it is one of the few parts of the LOI that should be. Pitfall: asking for too long. Thirty to sixty days is normal; a ninety-day no-shop on a hot asset will get countered or rejected.
6. Expiration & confidentiality
Give the LOI a hard expiration date and time so it cannot sit open while the seller shops it. Make confidentiality and governing law binding, and add a clear closing line stating that — apart from the named binding sections — the LOI creates no obligation until a definitive agreement is signed. Pitfall: omitting that non-binding statement. Without it, a court can read an apparently complete LOI as an enforceable contract, which is the opposite of what a letter of intent is for.
Frequently asked questions
Is a letter of intent binding?
Most of a commercial real estate LOI is non-binding — it sets out the business terms the parties intend to agree, subject to a definitive contract. But specific clauses are usually written to be binding: exclusivity (no-shop), confidentiality, governing law and the costs/expenses provision. Always state plainly which parts bind and which do not, and have counsel confirm it, because a poorly drafted LOI can accidentally create an enforceable agreement.
How long should a CRE LOI be?
One to three pages. The point of a letter of intent is to align the parties on price, deposit, due diligence, closing and the key contingencies quickly, before lawyers spend hours drafting a full purchase and sale agreement. If your LOI runs past three pages you are probably drafting the contract itself — push that detail into the definitive agreement instead.
What's the difference between an LOI and a contract?
An LOI (letter of intent) is a short, mostly non-binding summary of the deal terms used to confirm both sides are aligned before incurring legal cost. The contract — the purchase and sale agreement or the lease — is the long, fully binding document the lawyers draft from the LOI. The LOI is the handshake; the contract is the signed deal.
Who writes the LOI — buyer or broker?
Usually the buyer's side drafts it: in a sale the buyer or the buyer's broker, in a lease the prospective tenant or the tenant rep. Whoever drafts it sets the opening anchor on price and terms, which is an advantage. The other party's broker or counsel then counters. On listed deals the listing broker often supplies a preferred LOI form to keep submissions comparable.
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