A letter of intent is a document in which you spell out the terms according to which you would agree to buy a building. I advise that you hire an attorney or have your real estate agent assist you in creating this document, as this will be a binding agreement. Forgetting something crucial and then asking for an additional clause once everyone is in agreement won’t be tolerated by most sellers. The following are items you may want to consider:
Property Address
Identify the seller and get an address for their written notice
Identify yourself and the address the seller can use to notify you
Sales Price
Deposit amount, when it is due, and to whom it is paid (preferable to a title company)
How many days the buyer has to apply for a loan with the bank
The ability to get your deposit back if any of the inspection items fail prior to the agreed upon expiration date
An agreed upon extension to extend the contract if a timeline can’t be met
Structural inspections, which will be completed by a specified date
Date that city inspection will be completed by if required in the city where the building is located
Title work that is free and clear or can be cleared within a specific time
Outline the zoning process and timeline
Identify the title company
Contract Termination Options
How will prepaid taxes be handled
These are just a few items that you could include in the letter of intent. In our next update, we will provide you with more ideas.