Letter of Intent (LOI) Document

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What is a letter of intent (LOI)

A letter of intent (LOI) is an agreement to negotiate the terms and conditions for a future transaction. It’s not binding, but it does establish that both parties are interested in pursuing the matter further. The LOI lays out what each party wants from the deal, and establishes timelines for negotiations to take place. The letter of intent is an easy way to get started with your search without committing too much time or money upfront. You can use this document to find out if there are any properties that meet your criteria before deciding which one is best for you.

Commercial real estate uses the letter of intent to help potential tenants and landlords understand each other’s needs before signing a lease. It outlines the basics like location, size, and rent price as well as more detailed information about parking spaces or amenities like on-site daycare.

If you’re looking for commercial real estate, then a LOI might be just what you need! An LOI can help set expectations with your potential partner before signing on any dotted lines so there won’t be any surprises later down the line when it does come to negotiating. Plus, if things don’t work out as planned, at least you’ll know where to go next!

Click below to download our free template to write your own letter of intent today!

Benefits of an LOI

  • Sketch out fundamental agreements before pursuing due diligence
  • To declare the parties are now negotiation
  • To provide stipulation in case the deal collapses

Drawbacks of an LOI

  • Negotiations are protected based on previous agreements
  • Opportunities may be missed as a result of non-competition or binding agreements
  • Public disclosure may be required
  • Parties can negotiate in bad faith

Get a Custom Letter Of Intent Written By Canada Business Lawyers

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Letter of intent where there are multiple parties involved

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LOI with binding term sheet

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Drafting considerations and help formulating legal language like "It is agree, upon acceptance, shall vs will"

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Outline the incidental expenses like property taxes, insurance, utilities and other leasing options

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Letter of Intent FAQ

Is a Letter Of Intent Legally Binding?

Letter of intent is not legally binding.  Formal contracts will replace the LOI and the LOI is really only used as a tool to help negotiation stay on track.  The formal contracts often have clauses that eliminate and previous agreements that came up during the drafting of the final agreements.

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