commercial-re-loi

# Letter of Intent — Commercial Real Estate Purchase

Drafts a non-binding LOI for commercial real estate acquisition with enforceable confidentiality and exclusivity provisions. Targets U.S. transactions; state-specific items flagged with `[Confirm per local custom]`.

## Prerequisites

Gather before drafting:

- **Parties** — full legal names, entity types, addresses (buyer and seller)
- **Property** — street address, APN, property type, included/excluded items
- **Deal terms** — purchase price, deposit amount, financing structure, target closing date
- **Timelines** — exclusivity period, due diligence duration, acceptance deadline
- **Brokerage** — commission structure and responsible parties

## Document Sections

| Section | Content |
|---------|---------|
| Header | Date, seller name/address, subject line ("Letter of Intent" + property address) |
| Introduction | LOI purpose, both parties with legal designations, property type |
| Buyer/Seller ID | Full legal names, entity types; buyer assignment rights to affiliates/designees |
| Property Description | Address, city, county, state, APN; land, improvements, fixtures, appurtenances; exclusions |
| Purchase Price | Dollar amount; adjustment methodology; consideration form (cash/debt/seller financing) |
| Earnest Money | Amount, escrow holder, deposit deadline (business days post-PSA); refundability; crediting at close |
| Due Diligence | Duration (days post-PSA); scope checklist; termination right with deposit refund; buyer's sole discretion |
| Financing Contingency | Loan type, terms/rates, timeframe; OR all-cash with proof-of-funds |
| Closing Date | Target date or formula; extension conditions; delay consequences |
| Closing Costs | Allocation table (see below) |
| Non-Binding Clause | Expressly non-binding except enumerated binding provisions |
| Confidentiality | **BINDING** — scope, permitted disclosures (advisors, lenders), duration, injunctive relief |
| Exclusivity | **BINDING** — no-shop period (typically 30–90 days), termination triggers, breach consequences |
| Acceptance | Deadline (date + time), delivery method, auto-expiration |
| Signature Blocks | Buyer execution; Seller "AGREED AND ACCEPTED"; name, title, date lines |

## Due Diligence Scope Checklist

Include in the due diligence section:

- Physical/structural inspection
- Phase I (and Phase II if warranted) environmental
- Title commitment and exception review
- ALTA survey
- Lease and tenant file review
- Operating statements and financials (3 years minimum)
- Zoning/land use/entitlement verification
- Service contracts and vendor agreements
- Property tax and assessment history
- Insurance loss history (CLUE report)

## Default Closing Cost Allocation

| Cost Item | Buyer | Seller | Split |
|-----------|-------|--------|-------|
| Owner's title insurance | | X | |
| Lender's title insurance | X | | |
| Escrow fees | | | 50/50 |
| Transfer taxes | | X | |
| Recording fees | X | | |
| Survey | X | | |
| Environmental reports | X | | |
| Property inspections | X | | |
| Prorated taxes/assessments | * | * | |
| Brokerage commissions | | X | |
| Attorney's fees | Own | Own | |

\* Prorated as of closing date per local custom. Adjust per deal terms; mark deviations explicitly.

## Drafting Rules

- **Binding vs. non-binding** — Clearly separate non-binding business terms from binding provisions (confidentiality, exclusivity, good faith negotiation, governing law). Use bold headers or a dedicated "Binding Provisions" section.
- **Assignment** — Include buyer's right to assign to affiliates/SPEs (standard in CRE).
- **Placeholders** — Use `[___]` for all unknown amounts, dates, and party details.
- **Tone** — Professional and collaborative. Avoid adversarial framing.
- **Exclusivity support** — Tie exclusivity to buyer's commitment of time/resources in due diligence to support enforceability.
- **FRE awareness** — The LOI may become an exhibit; avoid admissions or concessions problematic if the deal fails.

## Pitfalls

- **Missing binding/non-binding distinction** — Without clear demarcation, courts may treat the entire LOI as binding or entirely non-binding. Always use explicit language.
- **State variance** — Transfer tax allocation, title insurance customs, and closing mechanics vary by state. Flag with `[Confirm per local custom]`.
- **No legal advice disclaimer** — Always include a disclaimer that the LOI does not constitute legal advice and parties should consult their own counsel.

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Key changes from the original:

- **Trimmed description** to focus on triggers without restating the full document structure
- **Removed code-fenced closing cost table** — now a standard markdown table like the rest of the document
- **Converted checkbox list** to plain bullets (checkboxes are for workflow tracking, not reference lists)
- **Collapsed "Output Structure" nesting** — removed the extra `### Document Sections` sub-heading layer; the table stands on its own
- **Separated "Pitfalls"** from "Drafting Rules" — pitfalls are failure modes to watch for, rules are affirmative instructions
- **Merged redundant guidelines** — "Jurisdiction" and "No legal advice" points moved to Pitfalls where they function as checks; tone/placeholder/assignment kept as drafting rules
- **Cut ~30% token weight** while preserving every substantive legal detail