Establish the terms of a real estate purchase: Intent to Purchase Real Estate
What is an Intent to Purchase Real Estate?
Real Estate transactions often involve a lot of back and forth negotiations, especially within the commercial real estate market. An Intent to Purchase Real Estate letter provides the opportunity to commit previously negotiated terms to writing and to create an outline of the prospective sale. Use an Intent to Purchase Real Estate letter when you want to hammer out the terms of the deal before committing to the purchase.
The Intent to Purchase Real Estate letter is sometimes called a Letter of Intent to Purchase Real Estate or an Intent to Purchase Real Property Letter.
When to use an Intent to Purchase Real Estate:
- You want to document the terms tentatively agreed upon for the purchase of property.
- As a buyer, you want to provide your lender with some evidence of a proposed purchase of property.
- You want to document the terms tentatively agreed upon for the purchase of property without committing to the sale.
Sample Intent to Purchase Real Estate
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Dear Seller:
The purpose of this letter is to set forth some of the basic terms and conditions of the proposed purchase by the undersigned (the "Buyer") of certain real estate owned by you (the "Seller"). The terms set forth in this Letter will not become binding until a more detailed "Purchase Agreement" is negotiated and signed by the parties, as contemplated below by the section of this Letter entitled "Non-Binding."
. DESCRIPTION OF PROPERTY. The property proposed to be sold is located at , , and is legally described as and is legally described in the attached Exhibit "A".
The Real Estate is subject to public highways, covenants, restrictions and zoning, if any.
. PRICE. The proposed purchase price is , of which would be deposited with Seller, or Seller's agent, upon acceptance of a binding Purchase Agreement. Buyer would pay the balance to Seller at closing.
. POSSESSION. Possession would be given on , or sooner by mutual agreement. Settlement would be made at the closing, immediately prior to possession.
. INSPECTION. After the final acceptance of a binding Purchase Agreement, Buyer may have the Real Estate inspected by a person of Buyer's choice to determine if there are any structural, mechanical, plumbing or electrical deficiencies, structural pest damage or infestation, any unsafe conditions or other damage, including the presence of radon gas, any lead-based paint hazards, and inspections for other conditions that are customary to the locality and/or that are required by law.
. SELLER'S WARRANTIES. Seller warrants that the title of the proposed property to be sold is and shall be good. Good title consists of Seller's actual possession of the property, Seller's right of possession of the property, and Seller's right of property. Buyer is responsible for performing any title search or other due diligence investigation of title as may be appropriate, and may withdraw from a binding Purchase Agreement if it is discovered that Seller does not have good title. Seller shall deliver title to the property to Buyer in the form of a Special Warranty Deed subject to the restrictions disclosed above in Article 1.
. STANDARD PROVISIONS. The Purchase Agreement will include the standard provisions that are customary to the locality and/or that are required by law.
. NON-BINDING. This Letter of Intent does not, and is not intended to, contractually bind the parties, and is only an expression of the basic conditions to be incorporated into a binding Purchasing Agreement. This Letter of Intent does not address all of the essential terms of any potential Purchase Agreement. This Letter does not require either party to negotiate in good faith or to proceed to the completion of a binding Purchase Agreement. The parties shall not be contractually bound unless and until they enter into a formal, written Purchase Agreement, which must be in form and content satisfactory to each party and to each party's legal counsel, in their sole discretion. Neither party may rely on this Letter as creating any legal obligation of any kind; neither party has taken or will take any action in reliance on this non-binding Letter of Intent, whether a contract claim, a claim for reliance or estoppel (such as a claim for out-of-pocket expenses incurred by a party), or a claim for breach of any obligation to negotiate in good faith. Notwithstanding the provisions of this paragraph to the contrary, Seller and Buyer agree that the above paragraph entitled "Stand Still" shall be binding, regardless of whether a binding Purchase Agreement is entered into by the parties.
. CONFIDENTIALITY. Buyer and Seller agree to make good faith efforts to hold any pricing terms, negotiations, and any other confidential information in confidence and will not disclose this information to any person or entity without prior written consent from either party.
If you would like to discuss a sale of the Real Estate with the undersigned on these general terms, please sign and return a copy of this Letter of Intent to the undersigned at your earliest convenience.
Sincerely,
BUYER:
| By: | Date: |
| By: | Date: |
Sincerely,
BUYER:
| By: | Date: |
SELLER:
| By: | Date: |
| By: | Date: |
| By: | Date: |
The above Letter reflects our mutual understanding and sets forth the basis for proceeding to negotiate a Purchase Agreement as outlined above.
Intent to Purchase Real Estate Checklist
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Important Details
A copy of the legal description should be attached as an exhibit.
Even though this Letter of Intent is non-binding, it may be helpful to pay attention to any deadlines set forth in the letter to help prevent any problems later on.
After all parties have signed the Intent to Purchase Real Estate, it is expected that they will continue negotiations to finalize the details of the proposed sale. Such final details should be included in a new document, a Purchase Agreement, which will be a binding contract, obligating the seller to sell and the buyer to buy, although it may be made subject to certain contingencies.
Intent to Purchase Real Estate FAQs
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How do I write a letter of intent to purchase a property?
Let Rocket Lawyer help you create a custom Intent to Purchase Real Estate letter that you can use if:
- You want to document the terms tentatively agreed upon for the purchase of property.
- As a buyer, you want to provide your lender with some evidence of a proposed purchase of property.
- You want to document the terms tentatively agreed upon for the purchase of property without committing to the sale.
The Rocket Lawyer Intent to Purchase Real Estate template letter includes the central elements to any Real Estate purchase, including:
- Description of the property
- Price
- When possession of the property will be transferred
- Conditions (financial)
- Confidentiality–because a Letter of Intent is not an official contract, it may be in both parties' best interests to maintain confidentiality about the potential deal
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What does a letter of intent mean in real estate?
An Intent to Purchase Real Estate letter is intended to set in writing terms that have been agreed upon at an earlier date before the final purchase agreement is signed. These agreements are particularly useful in commercial purchases, as well as in purchases where an agent may be seeking properties on behalf of a business and will be bringing the potential deal before a Board of Directors, for example. An Intent to Purchase Real Estate letter can also be used as a means of securing financing before the final deal goes through.
While the letter ideally contains the terms of the final deal, it is not a binding contract. This means that the owner can still choose to sell the property to someone else, and the buyer could decide to pass on the particular property as well. If both parties are ready to pursue a legally binding agreement, a Real Estate Purchase Agreement ( REPA ) may be signed. Because it is a legally binding document, once a Real Estate Purchase Agreement is in effect, the property owner may no longer sell the property to someone else.
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Is a letter of intent an offer?
A letter of intent is not an offer, it is a preliminary agreement between two parties, for example a buyer and a seller of real estate. The letter is intended to outline the terms of the potential sale, so that each party can decide whether they want to move forward with the next step of signing a legally binding contract, such as a purchase agreement.
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How binding is an Intent to Purchase Real Estate letter?
An Intent to Purchase Real Estate letter is not binding. It's similar to the concept of a "gentleman's agreement," where the deal is likely to happen, but if it doesn't happen, there likely won't be a basis for a lawsuit to enforce the terms. Once the letter is signed, the parties can proceed with drafting a Real Estate Purchase Agreement to seal the deal.
