a letter of intent, or ‘loi’ for short, is a one or two-page nonbinding offer letter primarily used in commercial real estate. since commercial real estate deals are usually done with custom leases or purchase agreements and can be quite complicated an loi can be a real time saver and money saver, as it tries to get agreement between both buyer and seller on the key points of the deal (price, terms, time) before either party invests a significant amount of resources to have a lease or purchase agreement drawn up and reviewed by lawyers. letters of intent terms are different for leases versus sales. you can put almost anything you can dream up in there, but don’t go overboard putting every detail of the deal in them (how you prorate the use of gas on a master meter for a triple net lease for example), save that for the purchase agreement or lease. while not required, most agents like to put their logo in the header of the loi or use their company letterhead in keeping with the traditions of writing a letter. you can keep it pretty generic if you want with a sentence like “on behalf of buyer i am pleased to submit this proposal to purchase the premises referred to above under the following terms and conditions:” a property description- either sqft or different structures if it is better described in terms of the improvements.

in this article we’ll describe how to structure and write an loi, and explain why a loi is one of the most important documents in commercial real estate. a loi is used in commercial real estate to put the major points of a proposed purchase or lease into writing. a loi helps to ensure that both parties have a “meeting of the minds” before getting too deeply involved in a transaction. because an loi is free to make and non-binding, some prospects present as many letters of intent as possible in the hope that one is accepted.