A Letter of Intent is usually used in the beginning stages of a negotiation to get "good idea" of what the buyer and seller are each after. It is not required, and quite frankly, is not used in most transactions. However, a LOI is a good document to use _ especially if you are looking to purchase a property for substantially less than the listing price. Let's look at when the best time to use Offer to Purchase. Remember, this is the formal offer, and is legally binding once signed by both parties.
A fundamental flaw of the LOI, lies in what Vasilios J. Kalogredis, a Wayne, Pennsylvania attorney, calls "the uncertainty and potential risk of any such undertaking." Kalogredisis, a business contract law expert, explains it this way: "Letters of intent are often touted as a 'non_legally binding' way to get the parties to set forth in writing what the undertaking is among them relative to a transaction. Too often, parties will sign such a document, feeling that they have little or nothing to lose by doing so... [True, that's] one of the attractive elements of the letter of intent [its purported non_binding nature]. However, courts have found letters of intent to create binding obligations, even if the letter itself does not explicitly state that it is binding... certain provisions within the document may indeed [still] have legal effect."