An LOI with a price and nothing else is a quote. Ours carries process terms too: a deposit, an exclusivity window, a fee on financing we arrange, and a short list of provisions that bind. This is what committed on both sides looks like, written down now so nothing surprises you later.
It is earned only as costs are incurred and work is performed. The unapplied balance comes back to you if the deal ends.
What it pays for. Third-party work on your deal: appraisal, environmental, title and survey review, and counsel. On a $15 to $20 million purchase it is typically about $50,000.
Why it is paid directly to us. One account, one ledger. We apply it as costs come in and report what was applied. No escrow release mechanics, no counsel trust account in the middle.
What is not refundable. Amounts already applied to costs incurred. Those are spent on your deal and are not returned, even if it never closes. If you ask us to start definitive documents and then walk, a documentation charge stated in the LOI applies.
Why it exists at all: appraisal and environmental work cost the same whether a deal closes or not. A deposit means a sponsor shopping for a number is paying for the shopping.
The window. From countersignature to the earlier of closing or about 12 months. Development deals take time to entitle, price and finance. The window covers that.
The breakup fee. If you close a competing land-capital transaction inside the window, a breakup fee of 1% of the purchase price applies, plus reimbursement of our costs.
The 180-day tail. If the window ends and you close a competing land-capital transaction within 180 days, the fee still applies. It exists for one reason: a sponsor can wait out a window. The tail reaches only land-capital transactions — a ground lease or land sale-leaseback with someone else. It does not reach a refinance, a sale of the asset or a JV.
Why: once you sign, we commit investment committee time, third-party spend and, often, conversations with leasehold lenders. Exclusivity is what makes that spend rational.
We never lend on the leasehold. We buy land and hold it. If you want help with the leasehold loan, we introduce lenders and arrange it. The fee is 1% of a loan we introduce, earned only at closing of that loan. Use your own lender and there is no fee.
If the LOI ends and you later close with a lender we introduced, the fee survives for 12 months. Arranging is efforts only. No financing is promised, and the risk that financing is unavailable stays with the sponsor. Our closing is conditioned on concurrent leasehold financing acceptable to us. We do not close into an uncapitalized project. Lender expectations are covered on what leasehold lenders require.
Seller pays title, escrow and transfer taxes. It is a sale of your land. The closing costs of selling it sit with the seller.
A proceeds cap. Our purchase price is capped at 35% of appraised stabilized fee simple value. That cap protects your leasehold lender’s coverage as much as it protects us.
A re-scaling clause. Rent and price move mechanically with the appraisal’s stabilized NOI, in both directions. Your number, our sizing. The rent is fixed, non-amortizing, priced on the land and quoted on your property in writing.
| Binding at countersignature | Non-binding | |
|---|---|---|
| Process | Confidentiality. Exclusivity, tail and breakup fee. Expense deposit and cost reimbursement. Broker indemnity. | Closing date, diligence scope and timeline. |
| Protection | Exculpation, no-reliance and limitation of liability, including governing law, venue and jury waiver. Efforts-only acknowledgment. The non-binding section itself. | — |
| Economics | — | Price, rent, escalations, term, structure. All subject to investment committee approval and definitive documents. |
The protection terms have to be on the binding list. A limitation of liability that is itself non-binding protects nobody.
In plain English, the exculpation package says: we are a principal, not your advisor, broker or fiduciary. You rely on your own advisors. Our models are built from your data and are for discussion. Liability under the LOI is capped at the deposit. No oral side agreements. Venue is mutual.
“The deposit should only cover actual costs.” It does. That is why the first sentence of the deposit section says it is not earned on delivery. Applied amounts are documented. The balance comes back.
“Exclusivity plus a tail is too long for a non-binding letter.” The economics are non-binding. Our spend is not. The tail is narrow on purpose: it reaches a competing land-capital deal and nothing else. You stay free to refinance, sell or bring in a partner.
“Venue should not favor you.” Agreed. Venue on the binding provisions is mutual. The definitive ground lease follows the law of the state where the land sits.
We write these terms into the first LOI on purpose. A term that appears for the first time in definitive documents is a surprise, and surprises kill deals late. If a later draft changes anything, the cover note says what changed and confirms the economics did not.
A Phase I. Evidence of committed equity. On development deals, a completion guaranty and environmental indemnity from a guarantor with real net worth and liquidity; see guarantor capacity. Any C-PACE or other assessment paid off or excluded at closing. Sanctions and background screening of principals and guarantor.
What the LOI does not contain is the ground lease form. That goes to your counsel the day the LOI is countersigned. The countersignature window is five business days. What happens after that is on what happens after you send your deal.
The land, on a 99-year lease: nothing to manage, senior to the building’s lender, low yield because the buyer is buying the right to not pay the tax. The building above it: higher yield, paid monthly, depreciable. Both are replacement property. Both close on a date we control, which is the part that matters on day 140.
1031 SolutionsWorking with an intermediary? The standby sheet for line 3 of the identification form.
The unapplied balance is. The deposit is earned only as third-party costs are incurred and work is performed, and amounts already applied are not returned even if the deal never closes.
One account and one ledger. We apply it as costs come in and report what was applied, with no escrow release mechanics in the middle.
Only a competing land-capital transaction, such as a ground lease or land sale-leaseback with someone else, closed within 180 days after the window ends. It does not reach a refinance, a sale of the asset or a JV.
Only if we introduce the lender, 1 percent of that loan, earned only when it closes. Use your own lender and there is no fee. We never lend on the leasehold ourselves.
Confidentiality, exclusivity with its tail and breakup fee, the expense deposit, the broker indemnity, and the exculpation and limitation of liability package. Price, rent, term and structure are non-binding until definitive documents.
Stabilized NOI, total cost, the land basis and the capital stack. If it fits, the LOI carries every term on this page, in plain words, before you countersign anything.