by Peter Scherman of The B&B Team
Frequently in searching for an inn to buy, you find something that looks like it just might be the one. Unfortunately, you don’t really know, because there is a lot yet to be learned before making a firm commitment. If, however, you know enough (especially the financials) to be able to formulate a basic offer, a good way to start the process is sometimes with a letter of intent.
This simple document is nothing more and nothing less than what it is called. It can be quite formal and detailed or remarkably simple. Essentially a letter of intent is directed from the prospective purchaser to the seller stating the buyer’s intention to buy the inn. The very basic terms of the offer delineated in the letter should include the price, proposed closing date, and basic financing conditions. It should also include provisions for the itemized inventory, financial review and verification, home sale contingency (if applicable), inspections of the facilities, formal contract preparation, and any other terms which may be required or requested by the buyer. All of these contingencies should be met or waived within a specified study period.
When presented to the seller, the letter of intent can be negotiated. Since only the main points of the offer are covered, it’s relatively simple to reach agreement or learn that no agreement can be reached, at which point the parties can go their separate ways with little out-of-pocket expense. However, if the parties do agree, then the framework for a binding contract has been established, and each party has set pen to paper to express and accept that intent.
In most jurisdictions, a letter of intent is not binding, so a contract should be prepared as quickly as possible. The attorneys. however, have the framework with which to draft the main points.