What is a Letter of Intent?
A letter of intent (LOI) is a formal letter, spelling out your offer to a seller. It is a way to get the ball rolling to show your interest in purchasing or selling a particular piece of property (residential or commercial).
Why do you need to use a Letter of Intent?
A letter of intent shows that you are serious about proceeding with a purchase of sale. It sets the initial terms of the agreement between the parties.
When do you need to use a Letter of Intent?
A letter of intent is appropriate for a purchaser or seller when they are ready to move forward with a transaction. As the name insinuates, it establishes your intent to purchase or sell a piece of property. It should be used at the beginning of the buying process to lay out the terms of the transaction and ensure the parties are on the same page before proceeding further. It also speeds up the purchase process and preparation of the final purchase agreement because the letter of intent already has a lot of the details spelled out.
What are the main things that go into a Letter of Intent?
A letter of intent should first include your contact information. Be sure to include your name, business name, address, phone number, and email (if applicable). Next, identify the property address that is to be purchased. You can also include the legal description. You can obtain the official legal description from the county’s probate court or other appropriate state agency.
List the purchase price. You want to make sure you set out the purchase price so that when the other party reviews the letter, they can determine if they agree with those terms. Decide whether you will require a deposit. That is up to the seller and is typically standard for a transaction of this nature.
Describe any obligations or responsibilities of the seller and/or the purchaser. Each letter of intent will require different details depending on your preferences and other information about the transaction.
What are the most common mistakes to avoid?
A letter of intent is a pretty basic document. However, there are some common mistakes you should avoid.
You should make sure the information in the letter of intent is accurate. You want to double-check the proper address subject to the letter of intent is correctly identified. Spell out the purchase price of the sale. It is important to note that a letter of intent is not technically “legally binding.” However, there could still be some implications if one party or the other does not honor the terms in the agreement.
The parties should strive to act in good faith and respect the terms of the agreement. For example, the parties agree that the sale is contingent on obtaining financing, the purchaser must act in good faith to obtain such financing. If the purchaser simply ignores that provision and does not seek funding, that could be considered as not acting and in good faith, and legal consequences could follow.
The letter illustrates the parties’ intent for the purchase of commercial property. Be sure your terms are adequately listed and that the purchaser and seller are in agreement to move forward with the transaction.
Do I need to use a lawyer, accountant, or notary to help me?
You shouldn’t need a lawyer, accountant, or notary at this stage in the process. Remember, a letter of intent is used to show a purchaser or seller your interest moving forward with the transaction. This is an opportunity to set out the terms of the sale.
What is the easiest way to create a Letter of Intent?
The answer is simple, it’s here on Form Pros! We have completed all of the hard work for you. Just click to begin, and you will go through a few questions. The answers you provide will include the details of the transaction, and then it will be ready for you to utilize to get the process started on your purchase or sale.
Why use our Letter of Intent generator?
Our letter of intent generator makes the process quick and easy and allows you to proceed quickly to get your letter finalized and sent to the appropriate party. Time is of the essence when you are interested in purchasing or selling commercial property. Our generator will help you expedite the process to give you a competitive edge against other purchasers.
If you are a seller and want to get together the proposed terms to get things moving, our letter of intent generator is just what you need. It will get things moving so you can proceed with the transaction as quickly and expeditiously as possible.
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