Updated July 21, 2023
A commercial purchase letter of intent (LOI) is used during real estate negotiations to demonstrate a buyer’s interest in a property and to relay the major terms of a purchase agreement. These terms will include a property description, financial terms, closing procedures, whether or not a professional inspection is needed, and all other conditions that relay a general outline of the potential real estate transaction. The letter of intent will generally be a non-binding agreement that is followed by the execution of a legally binding contract known as a “commercial purchase agreement.”
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What is a Commercial Purchase Agreement?
A commercial purchase agreement is a contract between a buyer and seller that contains all terms pertaining to the sale of a commercial property. The agreement is drafted by the seller or their attorney and delivered to the buyer for evaluation. The seller will grant the buyer a period in which they must either accept the conditions or respond with new terms to renegotiate the contract. If no response is given within the stated time frame, the offer will be void and a new agreement must be created. Once both parties consent to the conditions, they may sign the agreement to formalize a legally binding document.
Sample – Commercial Purchase Letter of Intent
COMMERCIAL PURCHASE LETTER OF INTENT
Effective Date: June 10, 2019
RE: Intent to Purchase Commercial Property
This commercial purchase letter of intent (the “Letter of Intent”) represents the basic terms for an agreement between the Buyer and Seller. After this Letter of Intent has been made, a formal agreement may be constructed to the benefit of the Parties involved.
I. The Buyer: Stuart Smith (the “Buyer”).
II. The Seller: Jane Fondant (the “Seller”).
III. Property Address: 102 Industrial Rd. Unit 402, Mainsville, New York 10001 (the “Property”).
IV. Purchase Price: The Buyer shall purchase the Property for Three Hundred Thousand Dollars ($300,000) (the “Purchase Price”).
V. Purchase Terms: Payment of the Purchase Price shall be made in the following manner: Financing from the Buyer’s financial institution.
VI. Bank Financing: The Buyer has made it known that their ability to purchase the Property is conditional on their ability to obtain financing.
If the purchase is conditional on financing, it shall be under the following terms: Buyer must show proof of financing within five (5) business days of signing a Purchase Agreement.
VII. Closing: The Closing shall occur on July 1, 2019, or earlier by mutual agreement (the “Closing”). Any extension to the Closing must be agreed upon in writing by the Buyer and Seller.
VIII. Closing Costs: All costs associated with the Closing shall be the responsibility of the Buyer.
IX. Possession: Possession of the Property shall be given on August 1, 2019, or earlier by mutual agreement (the “Possession”). Any extension to the Possession must be agreed upon in writing by the Buyer and Seller.
X. Property Inspection: After a binding Purchase Agreement has been made, the Buyer shall hold the right to have the condition of the Property inspected by a person of their choosing. The inspection shall occur no later than 7 days after a Purchase Agreement has been made.
After the Property has been inspected, the Buyer shall have an additional 5 days to report any new disclosures to the Seller in writing. If the Buyer and Seller cannot reach a mutual agreement within 3 days of delivery of the written disclosures, the Purchase Agreement shall be terminated with any earnest money being returned to the Buyer.
XI. Binding Effect: This Letter of Intent shall be considered non-binding. Therefore, the Parties acknowledge that this Letter of Intent is not enforceable by any Party. The terms outlined herein are solely for the purposes of reaching an agreement in the future, of which the Buyer and Seller are not bound.
XII. Standstill Agreement: Following the execution of this Letter of Intent, and until the Closing, the Seller shall not engage in negotiations for the sale of the Property with any other party unless the Buyer and Seller agree in writing to terminate this Letter of Intent, or the Buyer and Seller fail to sign a Purchase Agreement by June 17, 2019.
XIII. Additional Provisions: None.
XIV. Currency: All mentions of currency or the usage of the “$” icon shall be known as referring to the US Dollar.
XV. Governing Law: This Letter of Intent shall be governed under the laws of the State of New York.
XVI. Acceptance: If you are agreeable to the aforementioned terms, please sign and return a duplicate copy of this Letter of Intent by no later than June 13, 2019.
BUYER
Buyer’s Signature ______________________ Date ______________________
Print Name ______________________
SELLER
Seller’s Signature ______________________ Date ______________________
Print Name ______________________