Letter of Intent
Letter of intent to purchase real estate is usually expressed to be non-binding (with the exception of the confidentiality and exclusive dealing provision). The purchaser and the property seller often enter into a letter of intent to reflect the basic terms of the real estate deal.
• Signing a Letter of Intent to purchase real estate will allow the Canadian real estate investor a head start on site development, construction and financing before signing the formal purchase and sale contract. The Letter of Intent summarizes the discussions between the purchaser and seller to date.
• The seller will provide the purchaser with copies of all documents relating to the property and any tenants who are leasing space in the property, so that the purchaser can perform a full review prior to completing the transaction.
• Closing of the real estate deal is contingent upon several conditions precedent, including due diligence, satisfactory inspection of the property and review of all documentation, and the purchaser being able to secure sufficient mortgage financing.
The purchaser and the property seller agree to keep confidential all information exchanged with respect to the discussions and the transaction.
The purchaser and the property seller then begin negotiating definitive binding agreements. An unintended consequence of the activities taken during the negotiating period can turn the non-binding letter of intent into a binding agreement. Such activities include:
If the purchase and the property seller want to start work on the real estate deal while the definitive purchase and sale agreement is being negotiated then they should agree in writing.
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Disclaimer: This article of letter of intent is for general information purposes only and not intended as or to be relied upon for legal advice. Consult with a lawyer for your unique situation.
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