Letter of intent
A non-binding letter outlining the main terms of a potential deal before the full contract gets drafted. More common in commercial and investment deals than residential.
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Part 1 of 4
Why a seller cares
A letter of intent is a handshake on paper, not a contract. If an investor sends one for your home, nothing is agreed until the purchase agreement is signed, and either side can still walk.
Part 2 of 4
A simple example
A developer sends a letter of intent to buy your lot for $400,000, subject to a full agreement in 30 days. Nothing binds either of you yet.
| What the letter says | What it binds |
|---|---|
| Price and closing timeline | Nothing; these are the terms to be drafted |
| A confidentiality clause | Sometimes binding, if the letter says so |
| A signed purchase agreement follows | That is the contract, and the letter has done its job |
A letter of intent sets the table. The purchase agreement is the meal.
Part 3 of 4
What people get wrong
That a signed letter of intent means the home is sold. It is a plan to make a contract, and most say so in the first paragraph.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
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