A letter of intent to buy property is usually written under three circumstances:
• You want to document the terms tentatively agreed upon for the purchase of property.
• You wish to provide the seller with some evidence of your decision to buy the said property.
• You do not wish to commit to a sale but would still like to show the seller that you are interested in the property that he is selling.
In any of these circumstances, the decision to buy the property is usually quite set in the buyers mind. Although a letter of intent of this sort is not legally binding, it does have a moral bearing which is why people are quite careful when agreeing to write one. Typically, a letter of intent is written to minimize misunderstanding and document progress towards making the sale. It may also work wonderfully when the buyer is intending to secure financing and wants to provide proof of his intention to purchase property.
Since a letter of intent is not legally binding, the seller may choose to sell it to someone else, even if he has received the LOI from you. But there isn’t much that you can do about that, unless you have involved a legal counsel at the beginning and have made the agreement legally binding.
A sample letter of intent to buy property is given below for reference purposes:
125 Hudson Road
Cumming, GA 13750
October 1, 2016
Mr. Winston Foley
Chief Financial Officer
Grade 1 Machineries
81 Golf Road
Cumming, GA 18333
Dear Mr. Foley:
This letter being submitted to detail our interest in buying 125 Church Road, the previous industrial site for Grade 1 Machineries. We envisage that the principle terms and proposed transactions would be as follows:
• We will acquire the said property in its present condition without requests for changes or additions.
• Any equipment, whether old or recently acquired will the property of Grade 1 Machineries and duly returned on the day of acquisition.
• The said property will be available for tak over on December 15, 2016 at the very latest.
As consideration for this, we would provide a compensation of $300, 000 as follows:
1. $50,000 deposit on execution of purchase agreement.
2. $50, 000 within 2 weeks of the transfer of property.
3. Balance in equal payments made over the first 12 months after acquisition.
As part of this letter of intent, we request you to clear the property of any of Grade 1 Machineries’ possessions before the initial purchase agreement is drawn and signed by both parties. Please note that this letter of intent is not an official purchase agreement. Any terms and conditions of the proposed transactions will be negotiated, agreed upon and signed by both parties when the actual purchase agreement is drawn up.
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