What is a Letter of Intent or LOI?

Answer:
A letter of intent or LOI is a formal written

communication from one party to another indicating a commitment to complete a specified action. Letters of intent do not represent contractual obligations on the part of either the party who writes the letter or the person who receives it. These documents simply express a serious intent to pursue a business transaction.

Letters of intent are often issued when one business is seriously considering purchasing or merging with another organization. Letters of intent are also often used as precursors to purchase agreements in real estate transactions. For example, someone who is considering leasing or purchasing property may issue a letter of intent to the property owner.