A commercial letter of intent should capture the proposed economic and execution framework clearly enough to negotiate a purchase agreement and investigate the property. Price matters, but access, documents, timing, deposit structure, financing and unresolved assumptions can determine whether that price is achievable.
Counsel should prepare or review the actual LOI and determine which provisions are intended to bind and how applicable law treats them. This guide is a negotiation framework, not a form, legal opinion or claim that every LOI is nonbinding. Examples are hypothetical.
Identify the exact transaction
Describe the buyer, seller, property, parcels, interest and material included assets. Clarify separate parking, access, equipment, contracts or other components essential to the investment.
A street address can omit a lot or right that supports rent. A business sale can include operating assets different from the real estate. The LOI should not conceal those differences under a broad property label.
Identify entity and authority questions for counsel. A party negotiating economics may not be the legal owner or final acquiring entity. Set a practical path to consistent documentation.
Record assumptions that remain subject to investigation. The LOI should make uncertainty visible rather than treat a marketing description as a verified property fact.
Explain the price and consideration
State the proposed price structure and any material components, subject to actual advice and negotiation. Clarify whether separate assets, credits, assumed obligations or seller financing are contemplated.
Do not imply that a price reflects verified NOI when the financial investigation remains incomplete. A buyer can state the underwriting premises without pretending they are established facts.
Use a sources-and-uses estimate to test feasibility. Purchase, costs, work, reserves and financing must be funded, even if the LOI discusses only the seller payment.
A higher offer with fragile funding or unclear obligations may be harder to execute than a lower, well-supported proposal. The investor should know what it is promising before using price to win attention.
Establish the investigation period’s practical start
Discuss when the buyer receives access and a usable document package and how that relates to the proposed investigation schedule. Counsel should define the actual trigger and rights in the later agreement.
A nominal thirty-day period means little if leases arrive late or occupied areas cannot be inspected. Identify critical documents and access needs during negotiation.
The buyer should distinguish time to receive a report from time to evaluate findings and follow-up. An environmental assessment can identify additional work rather than complete the decision.
EPA’s All Appropriate Inquiries resources explain why environmental investigation has scope and timing implications for acquisition. Account for the actual professional process rather than assume one quick inspection resolves every concern. EPA All Appropriate Inquiries
Request documents that answer the thesis
Prioritize leases and amendments, rent and collection records, operating statements, taxes, insurance, contracts, condition, permits, title, survey, environmental and other relevant information.
The list should match the actual plan. A stabilized single-tenant purchase and a conversion project need different emphasis. Avoid an enormous generic request that leaves the critical issue unidentified.
Specify a practical delivery method and responsibility. A shared folder with unclear versions can slow review and create contradictions. The buyer should know which file is current.
Do not assume receipt proves accuracy or completeness. The later process should reconcile source records and allow counsel to address actual representations, reliance and remedies.
Negotiate access that fits the work
Discuss ordinary inspections, tenant coordination, specialist visits and any intrusive work requiring separate permission. Counsel should define actual scope, insurance, restoration, indemnity and procedures.
A buyer should not assume broad inspection language permits sampling, opening walls, roof cuts or other intrusive activity. Identify likely needs and obtain proper authorization through the documents.
Occupied properties require scheduling and accurate communication. A single unavailable area can block a material condition or use question. The investigation schedule should reflect actual access constraints.
Keep seller cooperation distinct from a guarantee of results. The owner may supply records or access while technical and legal conclusions remain the buyer’s workstream.
Align survey and title timing
Identify who orders, pays for and supplies existing title and survey material and how new work will be coordinated. Actual agreement terms should be prepared by counsel.
ALTA’s current 2026 survey standards include an explicit scope and optional items framework. A new survey order should fit the transaction and lender/title needs rather than assume an old seller survey answers every question. ALTA survey standards
Title, survey and legal review can interact. A recorded easement may need location and interpretation; a site issue may require missing documents or consent.
Allow time for response and decision. An LOI schedule that anticipates delivery on the final investigation day can create pressure without resolving the underlying risk.
Discuss financing assumptions honestly
Identify whether the proposal relies on financing and the expected process without describing a preliminary quote as a commitment. Counsel should structure actual conditions and rights.
The OCC’s commercial-real-estate resources provide context for lender evaluation of income, collateral and refinancing risk. A buyer’s underwriting and lender acceptance can differ. OCC commercial-real-estate resources
Test lower proceeds, reserves, fees and capital. A buyer who can pay the down payment may still be unable to fund the complete acquisition.
If offering certainty, establish the actual cash and obligations supporting it. Do not waive or promise protections simply because a term sounds more competitive.
A hypothetical timing comparison
Assume Buyer A offers $3 million with a proposed thirty-day investigation period, but has not identified access, reports or document delivery. Buyer B offers $2.95 million with a defined delivery and inspection process and a credible funding plan.
The $50,000 price difference should be compared with execution, not used as proof that either offer is better. If A’s critical report arrives on day twenty-eight and recommends further work, the nominal schedule may be unrealistic.
Suppose six extra weeks of carry and professional work cost the buyer $30,000 and uncertainty reduces financing by $150,000. The buyer’s actual equity and return differ from the original offer presentation.
The example does not establish standard periods or rights. It shows why the investor should negotiate a workable information-and-decision process alongside price.
Clarify deposits and economics of commitment
Discuss proposed deposit amounts, timing, holders, application and contemplated treatment, subject to counsel and actual documents. Do not rely on labels such as hard money without defining the legal and economic effect.
The buyer should know when capital becomes exposed and what unresolved questions remain at that point. A deposit schedule can create pressure to proceed before evidence is complete.
Compare deposit risk with investigation spending and financing. The maximum cash at risk includes professional fees, reports, design, applications and commitments as well as the deposit.
For partnerships, verify authority and funding before proposing the structure. An informal expectation that partners will contribute is not the same as committed cash.
Address interim property operation
Identify concerns about new leases, amendments, contracts, capital, tenant defaults or other changes before closing. Counsel should determine actual consent, notice and operating provisions in the purchase agreement.
A buyer’s price may assume a particular rent roll and condition. Material changes during investigation should be visible and evaluated rather than discovered at final settlement.
Do not demand control the buyer cannot administer or reasonably negotiate. Focus on actions capable of changing the investment’s income, obligations or execution.
Keep existing business operations and tenant relationships in mind. Investigation should be coordinated through the agreed process rather than create unsupported promises or disruption.
Handle confidentiality and exclusivity deliberately
Counsel should establish intended obligations, scope, duration, parties, exceptions and remedies. A general statement that the LOI is nonbinding should not be assumed to resolve every provision.
Consider the actual need: protecting sensitive documents, coordinating tenant contact, preserving a negotiation window or another purpose. Avoid adding terms without understanding their effect on the process.
The buyer should know what it may share with lenders, investors and advisers under the actual arrangement. Financing and diligence need appropriate information flow.
Track dates and end conditions. A negotiation can continue after an initial target, but the parties should understand which obligations remain rather than rely on memory.
Retain a dated assumptions sheet with the proposal. When the property facts or financing change, it helps the buyer explain whether revised economics reflect new evidence or a different negotiation position.
Move from LOI to a complete agreement
Use the LOI as a negotiation record, then have counsel prepare the actual purchase agreement and resolve definitions, conditions, representations, remedies, notices, closing and other material terms.
Identify changes from the LOI and their economic consequences. A modified access or deposit provision can matter as much as price even if it appears in a later legal section.
Do not begin irreversible or unauthorized work merely because the parties agree on broad economics. Obtain the actual required access and project permissions.
The useful LOI makes the next stage concrete: what is being bought, at what economics, with which information, access, funding and decision schedule. Proceed when that framework fits a credible acquisition plan rather than only an attractive headline offer.