Free Letter of Intent

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Letter of Intent

QGtype


Buying real estate
Buying a business
Buying assets
Buying shares
Entering into a partnership
Other

This Letter of Intent is not binding on either party and is only an expression of an intent to continue negotiations in good faith.



Your Letter of Intent

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LETTER OF INTENT

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

BETWEEN:


____________________ of _________________________

(the "Purchaser")

- AND -


____________________ of _________________________

(the "Seller").

BACKGROUND:

  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 future Contract, duly executed by the Seller and the Purchaser, will be enforceable. The terms and conditions of any future Contract will supersede any terms and conditions contained in this Document. The Seller and the Purchaser 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 $0.00 USD on or before the 26th day of November, 2020 (the "Closing Date") as final payment in full for the Property.
  7. The Purchaser will take possession of the Property on the 26th day of November, 2020.
  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 others 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 Purchaser accepts 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

Alternate Names:

A Letter of Intent is also known as a/an:

  • LOI
  • Term Sheet

What is a Letter of Intent?

A Letter of Intent (LOI) is a statement of understanding between two parties. LawDepot's Letter of Intent is non-binding, meaning that the parties are not legally required to follow through with the terms of the agreement.

The LOI acts as a foundation for a definitive agreement. By agreeing to the Letter of Intent, both parties intend to continue negotiations in good faith. When two parties agree to good faith obligations, it means that they are both sincere in their intent to act and carry out their promise.

Who should use a Letter of Intent?

You can use a Letter of Intent under any circumstance in which two parties agree to move forward in good faith before finalizing an arrangement.

For instance, a business owner with an interested buyer might agree to an LOI during the early negotiations for the sale of the business. In conjunction with a Confidentiality Agreement, an LOI creates the framework for negotiations, including the disclosure of confidential information relating to the business. This allows the buyer to assess the viability of the purchase in a way which also protects the interests of the seller.

If the negotiations are successful, the parties can give their approval to move into the next stage of the transaction, using a Purchase of Business Agreement.

How do I write a letter of intent?

You can create a Letter of Intent for many purposes, including:

  • Buying or selling items or real estate
  • Contracting services
  • Entering into a partnership
  • Leasing

Provide details for parties involved, including their name and full address. Give details of the arrangement, such as the property's price in real estate arrangements and if you are putting down a deposit. You should also provide the date that the arrangement is to take place. For some arrangements, this should include both a closing date and a possession date.

You can also provide details such as:

  • Financing
  • Exclusivity
  • Any contingencies for the deal, such as passing the due diligence process

While this isn’t a binding contract, it still indicates that all parties agree to move forward in good faith. To demonstrate that agreement, all parties should sign the Letter of Intent.

You need to know the basic details of your agreement. For example, if you’re creating an LOI for a real estate sale, you’ll need the address of the property and a legal description of the property. You should also clarify the kind of property, such as commercial or residential, and give a description.

Is a Letter of Intent binding?

A Letter of Intent isn’t usually a legally binding document. It must be carefully drafted so it doesn’t create legally binding obligations. This document outlines a proposed understanding between two or more parties who wish to finalize the details of a future transaction.

The purpose of a Letter of Intent is only to help finalize the details of a future agreement. The parties should not rely on the Letter of Intent as binding on the other party as it is only a tool to facilitate further discussion. Bankers and investors can also use a Letter of Intent in discussions as evidence of serious negotiation.

Keep in mind that just because something is in an LOI doesn’t mean that the agreement is final. Either party can still choose to end negotiations at any time with no legal ramifications.

How long should a Letter of Intent be?

The exact length of your Letter of Intent changes depending on its intended purpose. Typically, a Letter of Intent should be about a page long and no more than two pages. An LOI doesn’t need to be long because it only summarizes the initial terms of an agreement. If both parties decide to move forward with the deal, there will be more comprehensive details of terms and conditions in their final contract, such as a .

There are a number of reasons you might need to create a Letter of Intent, such as Transactions involving negotiation, fact-finding, or disclosure of information. In business or real estate transactions, an LOI provides an overview of the purchase details in advance of a binding agreement. The parties can outline any pre-conditions which will apply to the transaction, allowing them to clarify any defects or problems up front, saving time later.

Any circumstance under which you enter an agreement in good faith before finalizing the details can benefit from an LOI. Also, people like bankers or investors who are involved in negotiations can use an LOI to create a record of important discussions.

You can use a letter of intent for many circumstances other than the ones listed above, including:

  • Entering graduate school
  • Applying for a new job
  • Homeschooling your children
  • Purchasing a business
  • Contracting services
  • Entering into an entrepreneurship
  • Joint ventures
  • Athlete scholarship

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Sample of LawDepot's Letter of Intent template

Sample

Letter of Intent

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