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Letter of Intent Re Commercial Property

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Letter of Intent Re Commercial Property Powered By Docstoc
					This Letter of Intent is used to inform a seller of commercial property of a potential
purchaser's intent to purchase the property. The non-binding letter sets forth the
proposed terms and conditions of the agreement including the purchase price, a
description of the property, and the closing date. It also includes the approval period,
after which the proposal is no longer valid. This document provides a template for
drafting a letter of intent and may be customized to fit the specific needs of the parties.
This should be used by potential purchasers when negotiating to purchase commercial
property.




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       Letter of Intent with regard to Purchase and Sale of Commercial Property

                                              (Date of Letter)

(Name of Seller)
(Street Address)
(City, State, Zip Code)
Re: Letter of Intent for Property located at (Street Address, City, State, Zip Code)
Dear (Name of Seller):

        Pursuant to this Letter of Intent, the undersigned, (Name of Purchaser), a
corporation organized and existing under the laws of the state of (Name of state), with
its principal office located at (street address, city, state, zip code), referred to herein as
Purchaser, shall purchase from you, (Name of Seller), a corporation organized and
existing under the laws of the state of (Name of state), with its principal office located at
(street address, city, state, zip code), referred to herein as Seller, that certain property
located at (street address, city, state, zip code), hereinafter called the Property on the
following terms and conditions:

I.     Property Description
       The Property to be purchased includes all real and personal property consisting
of (description of property), including all leases, contracts and intangibles related to the
Property, and legally described in Exhibit A attached hereto and made a part hereof.

II.     Purchase Price
        The purchase price shall be $________________.

III.   Closing
       Closing will take place on (date). At closing, Seller, at Seller's expense, shall
deliver to Purchaser the items described in Section X and all other items that are
reasonably requested by Purchaser to transfer all right, title and interest of Seller in the
Property to Purchaser, and to give Purchaser assurances regarding environmental,
operational and other information with respect to the prior history and use of the
Property.

IV.     Title and Survey
        Seller shall deliver to Purchaser:

        A.    A title commitment proposing to insure Purchaser as the owner of the
        Property in the amount of the purchase price, with copies of all exceptions or
        matters referenced on the title commitment; and

        B.     The existing as-built survey for the Property within (number) business
        days following the execution of this Letter of Intent.

V.      Escrow Deposit



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       If Purchaser agrees to accept the Property at the end of the (number)-day
approval period as provided in Section VIII, Purchaser shall make a deposit of
$_____________ in the form of a promissory note from the Purchaser. The deposit is
referred to below as the escrow deposit. The escrow deposit will be applied to the
purchase price at closing or returned to Purchaser in accordance with Section VIII.

VI.     Costs
        A.    Seller agrees to pay the following costs:

           ALTA Form B extended coverage title policy including appropriate insurance,
            zoning and non-imputation endorsements;
           Documentary stamps;
           Intangibles taxes;
           Transfer taxes;
           One-half of any escrow fees;
           The survey;
           Costs to clear title, if any; and
           One-half of a Phase I Environmental Audit.

        B.     Purchaser will pay its own inspection and recording costs and one-half of
        the escrow fees. Each party will pay its own attorney's fees.

VII.   Purchase and Sale Agreement
       Purchaser will provide Seller with a form of a purchase and sale agreement for
the Property containing the essential provisions of this Letter of Intent and other
provisions acceptable to the parties. If the form of purchase and sale agreement is not
agreed to and executed within (number) days, then this Letter of Intent shall become
null and void and no party shall have any further obligation under it.

VIII.   Approval Period
        A.      Commencing with receipt of the documents for the Property listed on
        Exhibit B, Purchaser shall have a (number)-day inspection period ending on the
        approval date to perform its complete due diligence review, which may include
        (but is not limited to) an examination of title, inspections of the Property, a review
        of the Property's financial performance and the obtaining of all third-party reports.
        Seller and Purchaser will engage a qualified engineering firm to perform a Phase
        I Environmental Audit of the Property. The cost of this audit will be split evenly
        between the parties. Purchaser may waive the requirement of a Phase I
        Environmental Audit should Seller provide Purchaser with a prior Phase I audit
        acceptable to Purchaser. Purchaser will engage a consulting engineer firm to
        perform a physical inspection of the Property. The cost of this engineering
        inspection will be paid for by Purchaser.

        B.      To facilitate Purchaser's inspections within the approval period, Seller
        shall, in addition to items listed on Exhibit B, deliver or make available all books,
        records and financial documents, planning and zoning documents and approvals


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        and all environmental or soil or other construction tests for the Property for
        Purchaser's examination. Seller shall cooperate with Purchaser in providing
        access to Purchaser's engineers, analysts and appraisers, at Purchaser's sole
        expense, to conduct the inspections of the Property within the inspection period.
        The inspections will not disturb the use of the Property by Seller, and Purchaser
        shall be responsible for any damages caused by such inspections. On or before
        the approval date, Purchaser shall either:

                 1.    Notify Seller that it accepts the Property and place into escrow the
                 escrow deposit subject only to the remaining conditions stated in the
                 purchase and sale agreement; or

                 2.    Advise Seller of any problems which need to be addressed, in
                 which case unless the parties can reach a satisfactory resolution of such
                 problems, Purchaser may either elect to resolve these problems, or
                 terminate the agreement with no further liability on the part of either party.

        C.     If Purchaser is not satisfied as to any matters reviewed by it during the
        approval period or if any other conditions to the sale of the Property cannot be
        met, whether during or after the approval period, then Purchaser shall receive the
        return of its escrow deposit.

IX.     Condition of Purchase
        This offer is conditioned upon the following:

        A.    Purchaser's satisfactory review of the title commitment provided pursuant
        to Section IV and all matters affecting title to the Property;

        B.    Purchaser's inspection and approval of the as-built survey and the plans
        and specifications for the Property;

        C.     Evidence of proper zoning and other permits required for the operation of
        the Property;

        D.     Purchaser's inspection and approval of a soils report which shall include a
        toxic waste sign-off and construction testing procedures; and

        E.       Purchaser's acceptance of the Property by the approval date.

X.      Items to be Delivered at Closing
        The following items shall be delivered at closing:

        A.     The conveyance of title to the Property by general warranty deed, free and
        clear of all encumbrances;

        B.       The conveyance of title to the personal property of Seller located at the



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        Property by bill of sale, warranting that such personal property is free and clear of
        all encumbrances and security interests;

        C.    At Seller's expense, an ALTA Form B extended coverage owner's title
        insurance policy issued in accordance with the title commitment which has been
        accepted by Purchaser;

        D.    Evidence that Seller is authorized to sell and Purchaser is authorized to
        purchase the Property;

        E.   All items listed on Exhibit B, and to the extent possible, updated to within
        (number) days of the closing date;

        F.     Appropriate indemnifications from Seller regarding claims, liabilities,
        environmental matters and litigation;

        G.      An assignment of all contracts, permits, licenses and similar items
        affecting the Property; and

        H.   Pay-off letters and appropriate discharges and releases for any liens
        encumbering the Property.

XI.  Seller’s Documents
     Upon execution of this Letter of Intent, Seller will forward to Purchaser, within
(number) business days, the items listed on the attached Exhibit B for the Property.

XII.   Time of Expiration
       Unless the undersigned shall receive from Seller an executed copy of this Letter
of Intent on or before (date) at (time of day), hereinafter referred to as the time of
expiration, the offer contained in this Letter of Intent shall lapse and terminate at the
time of expiration and shall be null and void and of no further force or effect.

XIII.  Third-Party Negotiation
       So long as Purchaser is not in default of this agreement or the subsequently
executed purchase and sale agreement, Seller shall not enter into any agreement with
other prospective purchasers in derogation of this Letter of Intent.

XIV.    No Definitive Contract
        This Letter is intended as an expression of the mutual intent of the parties as to
certain aspects of a proposed transaction. The parties, however, agree that there are
material terms as to which agreement has not been reached. The parties also agree
that this letter is not intended to be and is not to be construed to be a definitive contract
and is subject to execution and delivery of purchase and sale agreement satisfactory to
the respective counsel of the Parties. If the purchase and sale agreement described in
this Letter of Intent is not executed by both parties within (number) days after Purchaser
submits its proposed purchase and sale agreement to Seller under Section VII, then



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this Letter of Intent shall have no further force and effect and neither party shall have
any obligation under it.

XV.     Brokers
        No Brokers shall be involved in this transaction.

        If the above terms and conditions are acceptable, please sign both copies of this
Letter, retain one copy for your files, and return the second signed copy to me.


____________________________
(Name of Purchaser)

By:__________________________
(Signature of Officer)

_____________________________
(Printed Name & Office in Corporation)

Agreed to and accepted on (date).

_______________________________
(Name of Seller)

By:____________________________
(Signature of Officer)


_______________________________
(Printed Name & Office in Corporation)


(Attach Exhibits)




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Description: This Letter of Intent is used to inform a seller of commercial property of a potential purchaser's intent to purchase the property. The non-binding letter sets forth the proposed terms and conditions of the agreement including the purchase price, a description of the property, and the closing date. It also includes the approval period, after which the proposal is no longer valid. This document provides a template for drafting a letter of intent and may be customized to fit the specific needs of the parties. This should be used by potential purchasers when negotiating to purchase commercial property.