Free Memorandum of Understanding

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Memorandum of Understanding


Buying or selling
Entering into a partnership

A Memorandum of Understanding can be used to negotiate the terms of the sale of real estate, a business, shares, or goods. Remember: A Memorandum of Understanding is NOT intended to be binding upon either party - its purpose is to express the intent of the Parties to continue to negotiate in good faith and to outline the key aspects of the transaction.

Your Memorandum of Understanding

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Memorandum of Understanding

THIS MEMORANDUM OF UNDERSTANDING (the "Document") made as of this ________ day of ________________, ________ (the "Execution Date"),


____________________ of _________________________

(the "Purchaser")

- AND -

____________________ of _________________________

(the "Seller")


  1. The Seller is the owner of residential property that is available for sale.
  2. The Purchaser wishes to purchase residential property from the Seller.

This Document will establish the basic terms to be used in a future real estate contract for sale (the "Contract") between the Seller and the Purchaser. The terms contained in this Document are not comprehensive and it is expected that additional terms may be added, and existing terms may be changed or deleted. The basic terms are as follows:

  1. Non-Binding
  2. This Document does not create a binding agreement between the Purchaser and the Seller and will not be enforceable. Only the Contract, duly executed by the Purchaser and the Seller, will be enforceable. The terms and conditions of the Contract will supersede any terms and conditions contained in this Document. The Purchaser and the Seller are not prevented from entering into negotiations with third parties with regard to the subject matter of this Document.
  3. Transaction Description
  4. The property (the "Property") that is the subject of this Document is located at:
    • ___________________________________________________________

  5. Purchase Price
  6. The Purchaser will pay to the Seller the amount of $___________ AUS Dollars on or before the 8th day of December, 2023 (the "Closing Date") as final payment in full for the Property.
  7. The Purchaser will take possession of the Property on the 8th day of December, 2023.
  8. Real Property Disclosure
  9. The Seller does not know of any material facts that would affect the value of the Property, except those observable by the Purchaser or known to the Seller and stated in this Document.
  10. Representations
  11. The Seller represents and warrants that the Property is free and clear of any liens, charges, encumbrances or rights of third parties which will not be satisfied out of the sales proceeds. If the representations of the Seller are untrue upon the Closing Date, the Purchaser may terminate any future agreement without penalty and any deposits must be refunded.
  12. Terms and Conditions
  13. The Contract will be subject to the Purchaser being approved for all financing by the Closing Date. Either the Seller or the Purchaser may cancel the Contract if the Purchaser cannot obtain adequate financing by the Closing Date despite due diligence and good faith on the part of the Purchaser.
  14. The Purchaser will accept the Property in its current state and condition without any further work, repairs, treatments or improvements.

This Document accurately reflects the understanding between the Seller and the Purchaser, signed on this ________ day of ________________, ________.

____________________ (Purchaser)

____________________ (Seller)

Letter of Intent Information

A Letter of Intent is also known as a:

  • Memorandum of Understanding
  • Heads of Agreement

What is a Letter of Intent?

A Letter of Intent (LOI) is a statement of understanding between two parties that establishes a foundation for a future agreement. By signing a Letter of Intent, both parties show that they intend to continue negotiations in good faith.

Generally, parties don’t intend to be bound by a Letter of Intent. LawDepot's Letter of Intent template produces a non-binding document, meaning the parties are not legally required to follow through with the terms of the agreement.

What is the purpose of a Letter of Intent?

A Letter of Intent creates a framework for negotiations. It can be difficult for two parties to continue negotiating without an outline of what they want to achieve and when they want to achieve it. A Letter of Intent outlines these stipulations to keep moving negotiations forward.

Also, an LOI can help parties focus on the issues that are relevant to the agreement rather than getting sidetracked by irrelevant details. By setting a closing date, which is the deadline that the parties expect to sign a binding agreement, parties can plan to finalise negotiations by a certain time.

When should I use a Letter of Intent?

A Letter of Intent is useful in any major or detailed business deal where there is a range of issues to be negotiated and decided. For example, you can use a Letter of Intent when you are:

  • Buying or selling real estate
  • Buying or selling a business
  • Buying or selling goods
  • Contracting or providing services
  • Lending or borrowing money
  • Entering into a business partnership

However, a Letter of Intent is not just limited to these situations. You can use a Letter of Intent under any circumstance in which two parties agree to move forward in good faith before finalising an arrangement.

How do you write a Letter of Intent?

To complete a simple Letter of Intent, you’ll need to provide the following information:

  • Party details: Specify if each party is an individual or company, and provide names and addresses.
  • Property, business, or transaction description: Depending on your situation, describe the real estate, business, or transaction.
  • Price or amount: If you are buying or selling real estate or a business, outline the price. If you are lending or borrowing money, specify the amount and term.
  • Closing date: Outline the deadline by which the parties expect to sign a binding agreement.
  • Additional clauses: If there are any terms or issues unique to your situation, include a clause to account for these details.

Depending on how you are using a Letter of Intent, you will have to provide the additional information that is relevant to your circumstances. For example, if you’re creating an LOI for a real estate sale, you’ll need the address and a legal description of the property. You should also clarify the kind of property, such as commercial or residential, and give a description. If you’re using a Letter of Intent to lend money, outline the loan amount and term.

Is a Letter of Intent binding?

LawDepot's Letter of Intent is not a legally binding document. Instead, it provides a structure for parties to negotiate freely and without the fear of being bound to any terms.

However, commercial negotiations often require confidential disclosures from one party so that the other party can decide whether to go ahead with the transaction. For example, if you are buying a business, you may need to see financial statements which the seller will need to be kept confidential. Sometimes, a Letter of Intent includes a section on confidential obligations, which is intended to be legally binding. LawDepot recommends using a separate Confidentiality Agreement for this purpose.

How do I terminate a Letter of Intent?

You don’t have to formally terminate a Letter of Intent as it’s not a binding agreement. If you’ve only created an LOI, you are only in the negotiation phase of an agreement. Either party can still choose to end negotiations at any time with no legal ramifications.

Related Documents:

  • Offer to Purchase Real Estate: Use this document to outline the terms of a proposed real estate transaction between a buyer and seller.
  • Purchase of Business Agreement: Use this document to purchase all the shares or assets of a business or company.
  • Bill of Sale: Use a Bill of Sale to detail the transfer of ownership of an item from a seller to a purchaser.
  • Confidentiality Agreement: Use this document to maintain privacy when confidential information is exchanged between parties.
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