Letter of Intent — Commercial Real Estate Purchase

Letter of Intent — Commercial Real Estate Purchase

Drafts a non-binding LOI for commercial real estate acquisition with enforceable confidentiality and exclusivity provisions. Targets U.S. transactions; state-specific items flagged with [Confirm per local custom].

Prerequisites

Gather before drafting:

• Parties — full legal names, entity types, addresses (buyer and seller)
• Property — street address, APN, property type, included/excluded items
• Deal terms — purchase price, deposit amount, financing structure, target closing date
• Timelines — exclusivity period, due diligence duration, acceptance deadline
• Brokerage — commission structure and responsible parties

Document Sections

Due Diligence Scope Checklist

Include in the due diligence section:

• Physical/structural inspection
• Phase I (and Phase II if warranted) environmental
• Title commitment and exception review
• ALTA survey
• Lease and tenant file review
• Operating statements and financials (3 years minimum)
• Zoning/land use/entitlement verification
• Service contracts and vendor agreements
• Property tax and assessment history
• Insurance loss history (CLUE report)

Default Closing Cost Allocation

* Prorated as of closing date per local custom. Adjust per deal terms; mark deviations explicitly.

Drafting Rules

• Binding vs. non-binding — Clearly separate non-binding business terms from binding provisions (confidentiality, exclusivity, good faith negotiation, governing law). Use bold headers or a dedicated "Binding Provisions" section.
• Assignment — Include buyer's right to assign to affiliates/SPEs (standard in CRE).
• Placeholders — Use [___] for all unknown amounts, dates, and party details.
• Tone — Professional and collaborative. Avoid adversarial framing.
• Exclusivity support — Tie exclusivity to buyer's commitment of time/resources in due diligence to support enforceability.
• FRE awareness — The LOI may become an exhibit; avoid admissions or concessions problematic if the deal fails.

Pitfalls

• Missing binding/non-binding distinction — Without clear demarcation, courts may treat the entire LOI as binding or entirely non-binding. Always use explicit language.
• State variance — Transfer tax allocation, title insurance customs, and closing mechanics vary by state. Flag with [Confirm per local custom].
• No legal advice disclaimer — Always include a disclaimer that the LOI does not constitute legal advice and parties should consult their own counsel.

Key changes from the original:

• Trimmed description to focus on triggers without restating the full document structure
• Removed code-fenced closing cost table — now a standard markdown table like the rest of the document
• Converted checkbox list to plain bullets (checkboxes are for workflow tracking, not reference lists)
• Collapsed "Output Structure" nesting — removed the extra ### Document Sections sub-heading layer; the table stands on its own
• Separated "Pitfalls" from "Drafting Rules" — pitfalls are failure modes to watch for, rules are affirmative instructions
• Merged redundant guidelines — "Jurisdiction" and "No legal advice" points moved to Pitfalls where they function as checks; tone/placeholder/assignment kept as drafting rules
• Cut ~30% token weight while preserving every substantive legal detail