Letter of Intent (LOI) for Multi-Family Deals: A Sample Walkthrough

 

In residential real estate, the first serious document is usually the offer itself. In multi-family and other commercial deals, there's often a step before that: the letter of intent. A letter of intent in commercial real estate is a short document that sets out the main business terms so buyer and seller can agree on the shape of a deal before anyone spends money on lawyers, appraisals, and engineering reports.

Done well, an LOI saves weeks and thousands of dollars. Done badly, it locks you into terms you didn't think through, or gives the seller an excuse to walk later. Most of the important negotiating in a multi-family deal happens at the LOI stage, even though most of the document isn't legally binding.

This guide walks through a sample LOI for a hypothetical Edmonton apartment building, clause by clause, and explains the reasoning behind each term. For the broader strategy, start with our pillar guide to commercial multi-family real estate in Edmonton.

 

Why a Letter of Intent Matters in Commercial Real Estate

Commercial deals involve more moving parts than a house purchase: rent rolls, operating statements, environmental reports, building condition assessments, and often CMHC-insured financing with longer timelines. An LOI lets both sides confirm they agree on the big items before investing in all of that.

•        For buyers, it secures a period to investigate without competing buyers, if you negotiate exclusivity.

•        For sellers, it confirms the buyer is serious and capable before opening the books.

•        For lenders and partners, it gives an early snapshot of the deal for preliminary approvals.

The Sample Deal

To make this concrete, here's a hypothetical deal we'll use throughout.

Term	Sample deal
Property	16-unit walk-up apartment building, Westmount area, built in the 1960s
Asking price	$2,750,000
Offered price	$2,560,000
Current gross rents	$20,800 per month (average $1,300 per unit)
Buyer's plan	Renovate units on turnover, finance with CMHC MLI Select

 

All figures are illustrative. Your deal's numbers will come from the rent roll, operating history, and comparable sales.

Sample Letter of Intent: Commercial Real Estate Clauses Explained

1. Parties and property

Sample wording: "The Purchaser, ABC Holdings Ltd., or its nominee, proposes to purchase the lands and building municipally described as [address], Edmonton, Alberta, legally described as [legal description], together with all chattels used in operating the building."

Why it matters: "Or nominee" lets you close in a new corporation. Including chattels covers appliances, laundry machines, and maintenance equipment.

2. Purchase price

Sample wording: "The purchase price shall be $2,560,000, subject to adjustments for rents, deposits, taxes, and utilities at closing."

Why it matters: Your price should come from your own analysis, not the asking price. Our guide to analyzing a commercial real estate deal shows how to back into a number from net operating income and cap rates.

3. Deposit

Sample wording: "An initial deposit of $50,000 shall be paid in trust to the Purchaser's lawyer within three business days of acceptance of the binding agreement, increasing by a further $75,000 upon waiver of conditions."

Why it matters: A staged deposit keeps most of your money safe during due diligence while showing the seller commitment.

4. Due diligence period

Sample wording: "The Purchaser shall have 45 days from receipt of all due diligence documents to satisfy itself in its sole discretion with all aspects of the property."

Why it matters: "Sole discretion" gives you a broad walk-away right. The clock should start when you receive documents, not when the LOI is signed.

5. Financing condition

Sample wording: "The Purchaser's obligation is conditional on obtaining financing satisfactory to the Purchaser within 75 days of acceptance."

Why it matters: CMHC-insured financing typically takes longer than conventional lending. If you're using MLI Select, allow realistic time for the application, appraisal, and underwriting. Our post on CMHC MLI Select for Edmonton investors covers the program.

6. Seller deliverables

Sample wording: "Within five business days of acceptance, the Vendor shall deliver: a certified rent roll; copies of all leases; operating statements for the past three years and year to date; property tax assessments; utility bills for the past 12 months; service contracts; insurance claims history; any building condition, environmental, or engineering reports; and a list of chattels."

Why it matters: These documents drive your underwriting. A seller who resists providing them is telling you something.

7. Closing date

Sample wording: "Closing shall occur 30 days after waiver of all conditions, or such other date as the parties agree."

8. Non-binding and binding provisions

Sample wording: "Except for the confidentiality and exclusivity provisions, this Letter of Intent is not binding and is intended only to set out the basis for negotiating a formal purchase agreement."

Why it matters: This is the most important legal sentence in the document. Without it, a court could find you agreed to a binding deal.

9. Exclusivity

Sample wording: "Upon acceptance, the Vendor shall not solicit, negotiate, or accept other offers for 21 days while the parties negotiate a formal agreement."

10. Expiry

Sample wording: "This Letter of Intent is open for acceptance until 5:00 pm Mountain Time on [date]."

 

Due Diligence Checklist After the LOI Is Signed

Item	What you're checking	Who usually does it
Rent roll and leases	Rents match leases and bank deposits	Buyer and accountant
Operating statements	Real expenses, not pro forma guesses	Buyer and accountant
Building condition assessment	Roof, boiler, plumbing, electrical, envelope	Engineer or inspector
Phase I environmental	Contamination risk, past uses	Environmental consultant
Appraisal	Value for lender	AACI appraiser
Title and zoning	Encumbrances, legal use, unit count	Lawyer
Insurance quote	Premiums, claims history, rental income coverage	Broker

 

Our guides on building condition assessments and commercial appraisals for Edmonton apartment buildings explain what each report should tell you.

Common LOI Mistakes

•        Making the due diligence period too short for CMHC timelines and engineering reports.

•        Starting the clock at signing instead of document delivery.

•        Forgetting exclusivity, so the seller keeps shopping your price.

•        Being vague on seller deliverables, which leads to delays and arguments.

•        Leaving out the non-binding statement, creating legal risk.

•        Over-negotiating small points at the LOI stage and losing goodwill before the real negotiation starts.

 

Use the LOI to Win the Deal You Actually Want

Before you send your next LOI, build your template with a lawyer, set realistic timelines for your financing, and list every document you need from the seller. Then focus your energy on the terms that drive value: price, conditions, and time. The cleaner your LOI, the smoother everything that follows.