Full Definition
A Letter of Intent is a non-binding preliminary document that outlines the key commercial terms of a proposed transaction: purchase price, earnest money, due diligence period, contingencies, closing date, and key conditions. Commercial LOIs are often heavily negotiated before moving to a Purchase and Sale Agreement.
Related Terms
PSA (Purchase and Sale Agreement)
The binding contract that governs a commercial real estate transaction. Drafted after LOI acceptance.
Earnest Money
Deposit paid by buyer to seller at contract signing, typically 1-5% of purchase price. Refundable during due diligence, non-refundable after.
Due Diligence
The investigation period after contract signing, typically 30-90 days, when buyer inspects everything about the property.