Whether or not your property is on the open market, your church may receive a Letter of Intent from a prospective buyer or developer. A Letter of Intent is nothing more, on its face, than one party putting into writing their intent to perform a specific act — usually the basic terms under which a buyer intends to purchase your property. The question that matters is whether signing that Letter of Intent commits your church to more than you think it does.
What a Letter of Intent Actually Is
Nearly every Letter of Intent contains language stating it isn’t intended to be a legally binding agreement — that it’s merely a summary of terms, with a formal purchase agreement to follow. That language matters, but it isn’t automatically the end of the analysis, and treating it as a guarantee of safety is where churches get into trouble.
Is a Letter of Intent Legally Binding?
Under California Civil Code §1550, a contract requires capable parties, mutual consent, a lawful object, and sufficient consideration. A Letter of Intent that spells out price, property, and closing terms starts to look like it satisfies those elements — non-binding language or not. Courts weigh the actual substance of the document and the parties’ conduct, not just its title or a single disclaimer sentence. See CA Civil Code §1550.
The leading California case on this is Copeland v. Baskin Robbins U.S.A. (2002) 96 Cal.App.4th 1251. The court drew a distinction that matters for any church weighing a Letter of Intent: an “agreement to agree” on essential terms later is not enforceable, but an “agreement to negotiate in good faith” can be — and a Letter of Intent can create exactly that obligation even while stating it isn’t a final contract. Baskin Robbins ultimately won that case, but only because the plaintiff couldn’t prove the right kind of damages — not because the letter was found non-binding.
The court’s own comparison case, Beck v. American Health Group Internat., Inc. (1989) 211 Cal.App.3d 1555, shows what clear language does: that letter explicitly stated no binding contract would exist until a formal contract was later drafted by counsel, and the court held it non-binding on that basis. The letter to Copeland contained no comparable disclaimer, which is why the contract-to-negotiate theory survived at all.
In short: don’t assume a Letter of Intent is safe to sign just because it says “non-binding” somewhere in the text. Whether the disclaimer is clear and complete, and how fully the letter spells out the deal, both affect whether a court will hold your church to it.
Why Developers Push for a Letter of Intent
Developers favor Letters of Intent because they secure the fundamental terms of a deal without the cost of a full purchase agreement. Once your church signs, you’ve signaled an intent to be bound — non-binding language or not — and if the developer later wants to hold your church to any specific term in that letter, you may find yourself with less room to negotiate further than you expected. A Letter of Intent can end up functioning like a handshake on the deal, with the final agreement filling in details around terms that were already effectively locked in.
Before You Sign
A Letter of Intent is voluntary. Your church is never obligated to sign one, and the details above are exactly why you shouldn’t without legal counsel reviewing it first. At minimum, confirm the letter clearly and unambiguously states it is non-binding, that a definitive agreement is required before either party is bound, and that no term in the letter — including any “good faith negotiation” language — creates an enforceable obligation on its own.
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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.
