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This post covers a sample letter of intent to purchase real estate
When you intend to engage in complex legal transactions like real estate purchases you need a tool (legal tool) to make sure everything runs smoothly.
I’m telling you that because Real Estate transactions often involve a lot of back-and-forth negotiations that make legal protection necessary.
The number one tool that will properly convey and legally protect your intention to purchase real estate is a letter of intent to purchase real estate.
Among other things, a letter of intent to purchase real estate will help you to set out the terms of the deal before committing to the purchase.
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My initial thought was just to give you a sample letter and go!
Although that may be exactly what you are looking for I think it is better to guide you on everything you need to know about a letter of intent to purchase real estate so that you can have a thorough understanding.
Therefore, here I will take you through
- what is a letter of intent to purchase real estate?
- why do you need a letter of intent to purchase real estate?
- How to write an effective letter of intent to purchase real estate
- Sample letter of intent to purchase real estate
let’s get started
Jump to section
What is a letter of intent to purchase real estate?
A letter of intent to purchase real estate is a brief statement of facts written by a person to show his intention to purchase real estate from another person or organization.
For instance, if Andrew has a home and you wish to buy it, you may legally state your intent by sending Andrew a letter expressing your desire to acquire his home.
And your letter is what will be referred to as a letter of intent to purchase real estate.
A letter of intent to purchase real estate establishes and outlines an agreement between two or more parties that will serve as the basis for a future or proposed Real Estate Purchase Agreement.
This letter is naturally not binding unless the parties agree to that effect.
When they agree, a clause should be added to the letter’s wording indicating that it is legally binding. Without such a written declaration it will be harder to enforce the letter.
Why do you need a letter of intent to purchase real estate?
The following are the benefits of a letter of intent to purchase real estate
- It will help you to set out the terms of the deal before committing to the purchase.
- It will give you a clear timeline for concluding the negotiations and completing the purchase.
- During the negotiation stage, it locks in the parties and prevents them from speaking with other parties about the same deal.
How to write an effective letter of intent to purchase a real estate
A letter of intent to purchase real estate is written in a business letter format. Begin your letter with your address and contact information, followed by a date and the potential seller’s address, and state that you are intending to purchase the seller’s real estate according to the terms that appear on your letter.
REMEMBER the aim of your letter of intent to purchase real estate is to express your intention to purchase real estate.
Therefore to write an effective letter of intent to purchase real estate do the following
- Provide your name/organization, address, and contact information
- Include the date of the letter
- Include the potential seller’s name, address, and contact information
- Provide the description of the property you want to buy (location, Block No. Lot no. etc)
- Provide the proposed purchase price
- Provide the mode of payment
- Provide the timeline for the purchase
- State whether you wish the letter to be binding or not.
- Explain who will bare the closing cost
- State when possession of the property will be transferred
- provide the right to inspect the property
- Provide a confidentiality clause
- Include the termination clause (how the intentions should be deemed to be terminated)
- Include the acceptance clause i.e how the intentions will be deemed to be accepted
- Maintain a professional tone
- Be honest
Sample letter of intent to purchase real estate
The following is the Sample letter of intent to purchase real estate
City, State, Zip Code
[Potential seller’s Name]
[Potential seller’s Street Address]
[Potential seller’s City, State, and Zip Code]
Re: Intention to purchase your House
Dear [Potential seller’s last name]
It is with great enthusiasm I’m writing this letter to express my intention to purchase your house when we will agree upon the following terms and conditions proposed in this letter.
The purpose of this letter is to set 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/ 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 ‘Binding effect’
[write the date that this letter of intent will be deemed effective]
[Insert the full name of the buyer]
[Insert the full name of the seller]
Location: [City, State, and Zip Code]
Legal Description: Block # Lot: #
The Property is defined as a [residential/commercial/condo/ etc]
The proposed purchase price is [$#] of which [$#] would be deposited in Escrow, upon acceptance of a binding Purchase Agreement. The buyer would pay the balance to the Seller at closing.
The Buyer has made it known that this Letter of Intent is not conditional on their ability to obtain financing
The Closing should occur within the agreed timeframe following the formal business purchase agreement between the Parties
All costs associated with the Closing shall be the responsibility of both parties, each bearing their own expenses.
Possession of the Property shall be given on [date] or earlier by mutual agreement (the “Possession”). Any extension to the Possession must be agreed upon in writing by the Buyer and Seller
After a binding Purchase Agreement has been made, the Buyer shall hold the right to have the condition of the Property inspected by a person of their choosing. The inspection shall occur no later than [#] after a Purchase Agreement has been made.
Seller shall not initiate or carry on negotiations for the sale of the Real Estate with any party other than Buyer unless either
- Buyer and Seller fail to enter into a binding Purchase Agreement by [#] HOURS from the time of acceptance of this agreement, or
- Buyer and Seller agree in writing to abandon this Letter of Intent.
This Letter of Intent should not be considered binding.
The terms outlined here are solely for the purpose of reaching a later agreement in the future, to which the Buyer and Seller are not bound.
(if you want the better to be binding, use the following clause)
This Letter of intent shall be considered binding.
Therefore, the parties acknowledge that remedies at law will be inadequate for any breach of this Agreement and consequently agree that this Agreement shall be enforceable by specific performance.
The remedy of specific performance shall be cumulative of all of the rights at law or in equity of the parties under this Agreement.
All negotiations regarding the Business between the Buyer and Seller shall be confidential and not to be disclosed to anyone other than respective advisors and internal staff of the parties and necessary third (3rd) parties.
No press or other public releases will be issued to the general public concerning the Business without mutual consent or as required by law, and then only upon prior written notice to the other party unless otherwise not allowed.
This Letter of Intent shall be governed under the laws of the State of [name of the state]
This Letter of Intent will terminate if there has not been a formal agreement signed within [#] days from the Effective Date.
If you agree to the above-mentioned terms, please sign this Letter of Intent and return the duplicate copy within [#] business days after the delivery.
Seller’s Signature __________ Date __________
Print Name __________
Buyer’s Signature __________ Date __________
Print Name __________