LETTER OF INTENT TO PURCHASE

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Doing FSBO on a residential property, sales price less than 160K Which is better for me, as seller, to use, this Letter of intent to Purchase or, the Agreement to Sell and Purchase in the other post? What needs improved, and how? What's missing?
Thanks,
Ofgift

LETTER OF INTENT TO PURCHASE
Date: __________________________
To: (seller)
From: ___(buyer)_______________________
Re: Residential property located at ___________________________ AZ.
The following sets out the basic terms upon which we would be prepared to purchase the
Property. The terms are not comprehensive and we expect that additional terms [including reasonable warranties and representation,] will be incorporated into a formal agreement (the “Agreementâ€) to be negotiated. The basic terms are as follows:
1. Purchaser: _____________________________ or it’s nominee
2. Vendor: Current owner of the Property _____(seller)____
3. Property: _______________________AZ, free and clear of all liens, charges and encumbrances at Closing, except: [e.g. those recorded on title to the Property as at the date hereof, with the exception of the Vendor’s mortgage(s)].
4. Purchase Offer:
Initial Deposit $_________________
New first mortgage $______________
Balance$_______________

5. DEPOSIT: Upon execution of the Agreement, the Purchaser will deposit the amount of $________________ which will be fully refundable if the Conditions Precedent are not satisfied or waived in writing by the Purchaser. Otherwise, the Deposit will be applied to the Purchase Price at Closing. If the Purchaser defaults at closing, the Deposit will be retained by the Vendor as its sole remedy.

OR THIS ONE
5. DEPOSIT: Upon execution of the Agreement, the Purchaser will deposit the amount of $________________ with _____Title Company. . The Deposit will be applied to the Purchase Price at Closing. If the Purchaser defaults at closing, the Deposit will be retained by the Vendor as its sole remedy.

6. Time is of the essence. All Inspections are to be completed within 5 calendar days of acceptance of offer, including review and approval of the documentation concerning the property, and Completion of satisfactory physical and environmental inspections of the Property, and Completion of satisfactory due diligence search and examinations, and
Satisfactory review of the title of the Property, and
Satisfactory mortgage financing being arranged for the purchase of the Property, all within 5 calendar days of acceptance of offer.

7. Additional Items: This letter of intent hereby states the major terms of the agreement
that the Purchaser would be prepared to move forward with.
This letter of intent is not a legally binding agreement between Purchaser and Vendor.
The above terms are accepted this ___________ Day of _______________, 2009

Signed: _____________________________________

Name: _____________________________________

Address ____________________________________________________________
Phone: ( ) Fax: ( ) Email:

[Scott Hubbard]

Originally posted by Ofgift Gift:

Which is better for me, as seller, to use, this Letter of intent to Purchase or, the Agreement to Sell and Purchase in the other post? What needs improved, and how? What's missing?
Thanks,
Ofgift

First, either sample Section 5 has really no difference. In my opinion, since the letter of intent is a prelude to a Sales Contract, you need not add the Title company name. Those issues are addressed in the "Agreement" or Sales Contract anyway. So, the "Deposit", will not be required until the Agreement is executed.

Secondly, it really should be the choice of the buyer which contract and terms to use when making an offer. And, the seller, can choose whether or not to accept a letter of intent.

Personally, I would not accept a letter of intent on a residential transaction. In Arizona, a letter of intent is inferior to a Sales Contract in terms of enforcing the performance. The letter of intent also gives the buyer a set number of days before they are required to sign a Sales Contract, five days in your LOI, which in turn really delays the time I can receive my money. Contrarily, on the sales contract, the clock begins ticking once the seller accepts the offer.

Letter of Intent is better used in commercial transactions since there is much more to do in terms of due diligence and performance and the closings are much longer.

Hope this helps.