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A commercial purchase letter of intent sets out the terms on which a buyer expects to acquire an income-producing or business-use property, ahead of a formal purchase agreement. It covers the price, the diligence period, and the conditions still to be met.
What separates it from a residential offer is what the buyer is really buying. A shopping centre, office building, or warehouse is valued on the income it produces, so the leases, the tenants, and the operating costs matter as much as the bricks.
Diligence is correspondingly heavier. Environmental review, structural survey, lease abstraction, and financial verification all take weeks, and no buyer wants to fund that before the headline terms are agreed.
Almost every commercial deal starts here. Both sides expect it, brokers usually draft the first version, and the lawyers work from what the letter settles.
Send a commercial purchase letter of intent once you have seen the property and the numbers and want to negotiate seriously. Typical situations include:
Very small or straightforward commercial deals sometimes go straight to contract. The letter earns its place whenever diligence is expensive, tenants are involved, or the parties are still negotiating in earnest.
A commercial purchase letter of intent usually runs one to two pages and reads as a term sheet.
Name the buyer and seller, including the entity that will take title and any right to assign to an affiliate.
Identify it precisely: address, parcel identifier, approximate area, and what is included or excluded.
State the price, the earnest money, when it is payable, whether it becomes non-refundable at any point, and who holds it.
Say whether the purchase is cash or financed and describe the debt you expect to arrange.
Give a defined window and name what it covers: title, survey, environmental, structural, leases, and financials.
List what the seller will provide and by when. The rent roll, operating statements, leases, service contracts, and any environmental reports all belong here.
Set out estoppels, consents, zoning confirmation, and any approvals the deal depends on.
Give a target closing, any no-shop period, and a date the offer lapses.
On a tenanted property, the leases are the asset, and a letter that treats them as an afterthought is doing half a job.
Ask for the rent roll and the actual leases early, not summaries. Rent, term, renewal options, break rights, and who pays which outgoings vary between units and drive the whole valuation.
Say what happens if the income is not as represented. A price adjustment mechanism, or a right to withdraw, is far easier to agree now than after diligence turns something up.
Raise estoppel certificates in the letter. Confirmation directly from tenants of their rent, term, and deposits is standard on commercial deals, and building it into the conditions avoids a scramble later.
Tip: Ask which figures are actual and which are projected. A property marketed on stabilised or pro-forma income can look very different once you see twelve months of collected rent, and settling that early prevents an awkward renegotiation.
Commercial property carries risks that residential rarely does, and the letter should reserve time and rights to investigate them.
Environmental assessment is routine on industrial, automotive, agricultural, and older commercial sites. Lenders frequently require it, and contamination liability can attach to an owner long after a sale, so the diligence window needs to accommodate it.
Structural and systems review matters at scale. Roof, envelope, HVAC, and life-safety systems on a large building are expensive to put right, and a survey may take longer to schedule than buyers expect.
Zoning and permitted use deserve their own condition where your plans differ from current occupancy. Confirming that your intended use is allowed, and that any change of use is achievable, belongs before you are committed rather than after.
Say who pays for what. Reports are expensive, and stating that the buyer bears diligence costs, or that costs are shared in some way, prevents an argument if the deal falls over.
A commercial purchase letter of intent takes about an hour once you have the property details. Document Genius walks you through each section with simple questions.
Open with the date, both parties, the entity taking title, and a precise description.
Give the offer, the earnest money, and how the balance will be funded.
Define the period and list exactly what the seller must hand over.
Title, environmental, structural, estoppels, zoning, and approvals.
Say which clauses bind, including confidentiality and exclusivity.
Date it, sign it, and pass it to your attorney. Start yours now and have it ready today.
Most commercial letters are written so that neither party must complete, with a short list of clauses intended to bind.
Confidentiality, exclusivity, expense allocation, and governing law are the usual exceptions. Label them explicitly, and include a line confirming that a signed purchase agreement will govern the transaction.
Watch the deposit language particularly. Whether earnest money is refundable during diligence, and what makes it hard, is the term most often misunderstood on both sides.
After signing, expect a purchase and sale agreement, the diligence period, then closing. The letter is the drafting brief rather than a substitute for the contract.
Commercial property transactions, disclosure duties, environmental liability, and whether a preliminary document can bind a party all vary by jurisdiction and by the specifics of a deal. Take advice from a commercial real estate attorney before you sign anything.
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