commercial-re-loi

name	commercial-re-loi
description	Drafts a Letter of Intent for commercial real estate purchase transactions. Covers purchase price, earnest money, due diligence, financing contingencies, closing mechanics, and binding provisions (confidentiality, exclusivity). Use when drafting LOIs, CRE purchase proposals, or pre-contract term sheets.
tags	["drafting","letter","transactional"]

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