Looking to sell your property?
Whether or not your property is on the open market, your church may receive a Letter of Intent from a prospective buyer. Simply put, a Letter of Intent is nothing more than one party putting into writing their intent to perform a specific act. In the real estate world, this usually means that a potential buyer has provided you with the basic terms in which they intend to purchase your property. But should you sign it?
Nearly every single Letter of Intent we have seen has language stating that it is not intended to constitute a legally binding agreement. It intended rather be a summation of terms or that a purchase agreement will follow after execution. So what’s the harm in signing? Don’t be fooled.
In short, by signing a Letter of Intent, you have essentially indicated that you intend to be bound by the terms of that letter. In other words, you are agreeing to enter into a contract to sell the church property to the prospective buyer, without terms that still need “to be determined”. We inform our clients to never sign a Letter of Intent. Why? Because by doing so, you have agreed to be legally bound by its terms, whether a formal purchase agreement follows or not.
Despite its language, a Letter of Intent is a legally binding contract wherein you agree to sell your property to that particular buyer. Any missing terms, should a purchase agreement not be executed, will be provided by the Court.
So why bother with a Letter of Intent in the first place?
Developers, in particular, love them because they are providing the fundamental terms of the purchase agreement without putting forth much effort. Should you sign that Letter of Intent, you are indicating to the developer and the Court, of “your intent to be bound,” non-binding or otherwise. Why take the chance? Although a Letter of Intent may expressly state that it is not legally binding, its terms may still be honored. As a result, the terms agreed to in the Letter of Intent may ultimately survive and become part of the purchase agreement, even though your church intended to negotiate them further. So if the developer wants to hold your church to any of the terms of the Letter of Intent, you may be obligated to do so without a good legal reason not to.
A Letter of Intent may be just as important as the final agreement because this is where the basic terms of the deal are addressed. Think of it as a handshake wherein two parties have agreed to the deal, just not its exact terms.
Something to Remember:
Letter of intents are voluntary, under no condition are you ever obligated to sign them, and you shouldn’t, without proper legal counsel.
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Disclaimer: Every situation is different and particular facts may vary thereby changing or altering a possible course of action or conclusion. The information contained herein is intended to be general in nature as laws vary between federal, state, counties, and municipalities and therefore may not apply to any given matter. This information is not intended to be legal advice or relied upon as a legal opinion, course of action, accounting, tax or other professional service. You should consult the proper legal or professional advisor knowledgeable in the area that pertains to your particular situation.