In real estate, a letter of intent refers to an initial agreement that is non-binding for two or more parties entering into a real estate agreement. Letters of intent are common for both leases and purchase of real estate.
A letter of intent is a precursor to a lease or sales contract, and it includes important information about the intended lease or sale of a residential or commercial property. The letter of intent includes the names of both the buyer and seller, the cost of the lease or the purchase price of the property, a physical description of the property, and the time frame. A letter of intent should also include any fees that the buyer and seller incur, including broker fees, escrow, and closing costs.
Gaebler.com states that a letter of intent is not a binding contract and can be revised. This document provides a general overview of the sale, providing a basic outline for both the buyer and seller of the initial terms of the agreement. The letter of intent also should include the way a tenant's rent will be prorated assuming the lease begins during the middle of the month. Once both parties are satisfied with the terms, then it's typical to proceed to a binding contract.