Free Letter of Intent (LOI) Template
Take advantage of our Letter of Intent template to finalize every detail of a future written agreement. With our outline, you can formally state your intention to create a legally binding contract.
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Last Update May 4th, 2023
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What is a Letter of Intent
A Letter of Intent, or LOI, is a legal document that establishes the intentions and conditions for two or more parties to enter into a contract. It can be used as a precursor to a formal contract.
A Letter of Intent does the following:
Communicates each party’s desire to formalize the agreement.
Establishes details before signing a contract.
Gives reassurances to each party that all intentions are sincere.
Provides a framework for future discussions.
Assists the parties in verifying the details of the agreement.
A Letter of Intent is useful when you want to show good faith, and help to progress the process of creating a formal agreement.
The document will usually set a limit for creating and signing a contract.
There are various types of LOIs, such as for real estate purchases, attending college or graduate school, to hire an employee, and many other types of arrangements.
Use our Letter of Intent template to create a document that includes all the terms and conditions of a future contract.
Is a Letter of Intent legally binding?
A Letter of Intent is normally non-binding. However, it does serve as an important means for establishing the terms and conditions for entering into a formal agreement.
For it to be enforceable, you would need to ensure there are terms that state the document is a binding agreement.
There could be certain consequences if a party does not comply with the agreed-upon terms of the letter if the document is binding.
For example, If one party drops out of the arrangement, they could be held financially liable for any financial damage the other party receives.
Letter of Intent Example
To help clarify what a Letter of Intent should look like, we have included an example of an LOI.
To have a better understanding of how to outline your legal document, you can review the example of a Letter of Intent to purchase property below.
[Date]
[Your name]
[Your address]
[Contact information]
Effective date
[Seller’s name]
[Seller’s address]
[Seller’s contact information]
This letter represents the terms and conditions to purchase the property located at [address] for $[price], and expect that this letter will serve as a formal agreement between [buyer] and [seller] under the laws of the state of [state].
The payment will be paid in [purchase terms].
[The buyer] has stated that their ability to acquire the property is [conditional or not conditional] on receiving financing from a bank.
The closing will be on [date], or before, if agreed mutually. Any costs related to the closing will be provided by the [buyer/seller/both parties]
The possession of the property will be given on [date] or before, if agreed mutually.
Once the legally binding agreement has been made, the buyer has the right to select someone to inspect the property on their behalf within X days.
This letter will be deemed non-binding, and the terms and conditions of this agreement are for the sole use of creating a future binding contract.
If you agree with the terms and conditions, sign and return a copy of this letter by [date].
Buyer
[Buyer’s signature]
[Date]
[Name]
Seller
[Seller’s signature]
[Date]
[Name]
How Does a Letter of Intent Work
There are various steps to follow to create a Letter of Intent and then complete a transaction.
Review and then complete the following steps to ensure your Letter of Intent is created correctly.
Negotiate the terms: Hash out the terms and conditions such as the price and payment details with the other party.
Draft the LOI: Create your Letter of Intent, and ensure you add as many agreed terms as possible. Ensure you state if the letter will be binding or non-binding.
Conclude the arrangement: Make a legally binding agreement based on the terms of the Letter of Intent, or finalize the transaction immediately.
By doing these steps correctly and in order, you will have a formal agreement in place before drafting a contract.
Unless you state otherwise in your LOI, the agreement will not be legally enforceable until you sign a legally binding contract.
How to Write a Letter of Intent
A Letter of Intent should include all the basic elements that would be included in its corresponding formal contract.
These include the names of each party, their contact information, the scope of work, deadlines, milestones, payment terms, and any other pertinent details.
To understand what to include in a Letter of Intent, review the following steps.
Enter your name and address
Write your full name and your address at the top of the document. This will serve as a return address to receive a copy of the letter in the future.
Include the name and address of the recipient
Add the name and address of the recipient, usually the seller. If it is a Letter of Intent for a job, this is where the employer’s information goes.
Ensure you add both the full name and full address to avoid any confusion.
State if the letter is binding or non-binding
Make sure to write a clear statement regarding if the letter will be binding or not. With a clear statement, both parties and any legal representatives can know if the document is enforceable or not.
Introduce the two parties
Add all the basic information regarding the parties involved in the LOI. This means, including your full name as well as the other party’s full name.
Also, include your full address and the other party’s complete mailing address. Enter the payment details.
Add payment terms
Include when one party will provide payments and how often.
In other words, how much the total amount is. Include if it will be paid all at once or in monthly or weekly payments.
State if financing is a requirement
Enter if bank financing will be a requirement for the buyer to complete a purchase. You can add if the agreement will be conditional upon the buyer obtaining financing or not.
Indicate the governing state
Add the state jurisdiction that the Letter of Intent will fall under. This is important as certain states have different laws, and they may affect your LOI.
Sign the document
Add the signatures of both parties to the bottom of the document. Both you and the other party must sign the Letter of Intent.
Provide your signatures, along with the date and your names in print.
Download LawDistrict’s legal template to ensure you do not leave out any essential details in your letter.
Letter of Intent vs. Cover Letter
A Letter of Intent can be used by a job applicant if you would like to be offered an employment contract. It mentions why the person writing the letter would like to work for a certain company.
This has a lot in common with a cover letter, and while some parts are very similar, there are key differences.
Check the table below to understand how to differentiate between a Letter of Intent and a cover letter.
| Letter of Intent | Cover Letter |
|---|---|
| Could be sent to a company when they are not hiring. | Sent when a company wants to fill a position. |
| Mentions motivations for working for a company. | Mentions motivations for working in a job position. |
| Introduces yourself and mentions your skills in the workplace. | Introduces yourself and mentions your relevant skills to the job position. |
Cover letters are used to apply for a specific position. If you would like to let a company know you would like to work for them, but they are currently hiring, you can send a Letter of Intent.
Sample Letter of Intent
To provide a better understanding of how to write a Letter of Intent correctly, you can review a sample of the document below.
Other Business Forms
Apart from a Letter of Intent, some other legal documents can help you formally complete a transaction.
Using LawDistrict, you can receive help in similar situations by using related documents such as:
Review these documents to help you create your Letter of Intent or assist you in similar circumstances.
Letter of Intent FAQs
To further clear up any misunderstandings you may have about LOIs, we have answered the most common questions on the subject.
Review the following answers to the most frequently asked questions regarding Letters of Intent.
How long should a Letter of Intent be?
The length of a Letter of Intent depends on why it is written in the first place. Depending on what you are purchasing or for who it is, it may be longer or shorter than other letters.
Generally, a Letter of Intent should be no longer than 2 pages. This type of document does not need to be extremely long.
What is the difference between an LOI and an LOA?
A Letter of Intent and letter of acceptance serve different purposes. A Letter of Acceptance (LOA) is a letter that confirms the acceptance of a bid or terms and conditions.
This is different from a Letter of Intent, which typically serves as a non-binding agreement.
Who Prepares a Letter of Intent?
A Letter of Intent could be prepared by anyone. There are other methods available, such as going to a lawyer.
However, you could end up paying excessive legal fees by asking a lawyer to write your Letter of Intent.
By using our legal template, you can make the process much cheaper and simple.
You are only a few steps away from your own Letter of Intent !