Memorandum of Intent to Purchase a Syndicator's Guide

Memorandum of Intent to Purchase a Syndicator's Guide

Master the memorandum of intent to purchase. Our guide for real estate syndicators covers key clauses, legal risks, and strategies to secure your next deal.

Domingo Valadez

Jan 18, 2026

Blog

When you're putting a real estate deal together, the memorandum of intent to purchase is like the strategic handshake that comes before you sign on the dotted line. I like to think of it as the engagement before the wedding—it's not the final marriage certificate, but it shows everyone you're serious, sets the ground rules, and outlines what both the buyer and seller have agreed to so far.

Unpacking the Memorandum of Intent to Purchase

In the real estate syndication game, a memorandum of intent to purchase (MOI) is that foundational, non-binding document that locks in the basic terms of a deal. It's the essential bridge between those initial back-and-forth negotiations and the heavy lifting of drafting a formal, legally binding purchase and sale agreement (PSA).

This document essentially becomes the roadmap for the entire transaction. It gets both parties on the same page about the big-ticket items before anyone starts spending serious time or money on lawyers and due diligence. While most of an MOI isn't legally enforceable, it creates a strong professional and moral obligation to keep negotiating in good faith.

Why It’s a Non-Negotiable First Step

For any real estate syndicator, the MOI isn't just a piece of paper; it’s a critical strategic tool. It lets you put a "soft lock" on a property, giving you the runway you need to kick off due diligence, nail down your financing, and start getting your investor group lined up.

Without an MOI, you're taking a huge risk. The seller could keep marketing the property to other buyers while you're already spending thousands on property inspections and legal fees.

A solid memorandum of intent to purchase should accomplish a few key things:

• Clarifies Core Terms: It gets the essentials down in black and white—the purchase price, closing timeline, and any major contingencies.
• Prevents Misunderstandings: By laying out the expectations early on, you dramatically reduce the chances of a major blow-up later.
• Builds Deal Momentum: It formalizes everyone's intent to move forward, which creates a powerful psychological commitment on both sides.
• Secures Exclusivity: This is a big one. A well-written MOI almost always includes a binding "no-shop" clause, which stops the seller from talking to other buyers for a specific period.

Essentially, the memorandum of intent transforms a verbal agreement into a structured framework. It’s the document that demonstrates you’re a serious buyer and sets the professional tone for the entire transaction, paving a clear path toward a successful closing.

Why Sponsors Need a Memorandum of Intent

For a real estate sponsor, a memorandum of intent to purchase is more than just another piece of paperwork—it's a critical strategic tool. Think of it as calling "dibs" on a hot property. In a competitive market, it carves out the breathing room you need to line up investor capital and finalize your syndication structure without constantly looking over your shoulder.

Essentially, this document hits the pause button on the deal's marketing. Once the seller signs, the asset is temporarily locked in, letting you shift your energy from winning the deal to executing it. You can confidently start the expensive, time-consuming due diligence process knowing the seller has agreed to work exclusively with you for a specific period.

Gaining Exclusivity and Building Momentum

Without a doubt, the most powerful part of a memorandum of intent to purchase for a sponsor is the exclusivity clause, often called a "no-shop" agreement. This is a legally binding term that stops the seller from marketing the property or even talking to other potential buyers. This protection is everything—it ensures the money and time you pour into inspections, legal reviews, and financial modeling won't go to waste if someone else swoops in with a higher offer.

This exclusivity also creates some serious deal momentum. It sends a clear signal to your potential investors that this opportunity is real and under control, not just some back-of-the-napkin idea. When you present a signed MOI in a professional deal room, it adds a layer of credibility that helps you lock in soft commitments and build investor confidence from day one.

Achieving Clarity and Reducing Risk

Beyond just securing the property, a well-drafted MOI forces everyone to get clear on the major deal points right at the start. In the fast-moving world of syndication, that initial alignment can make or break a deal. Hammering out the price, timelines, and key contingencies before drafting a lengthy, complex purchase agreement saves a ton of time and legal fees down the road.

In fact, some data shows that 72% of commercial real estate deals that start with a letter of intent move forward to a full purchase agreement. By settling key terms early—like the property description, financing contingencies, and a typical closing timeline of 90-120 days—parties can save an average of $50,000 in legal costs.

A memorandum of intent essentially de-risks the early stages of a transaction. It transforms a handshake agreement into a clear, documented framework, ensuring both sponsor and seller are aligned before committing substantial resources.

Sometimes, a sponsor’s motivation for an acquisition involves more than just the property itself; it could be tied to sophisticated financial planning, like understanding tax-advantaged strategies like a 1031 exchange. An MOI provides the secure, predictable timeline needed to properly structure these complex moves. At the end of the day, it's the foundational tool that turns a promising lead into a viable, investable syndication.

Essential Clauses Every MOI Should Include

A memorandum of intent to purchase is where a handshake deal starts to get real. It’s the document that takes a conversation and turns it into a structured, actionable framework. While most of it isn't legally binding, its power comes from the specific clauses that spell everything out, making sure you and the seller are on the same page before you start spending serious time and money.

Think of it like a blueprint for the final contract. You wouldn't build a house without one, and you shouldn't pursue a major acquisition without this crucial first step. Let's walk through the key components that make an MOI truly effective.

Defining the Core Deal Terms

First and foremost, the MOI has to nail down the fundamental commercial terms of the deal. Any ambiguity here is just asking for trouble later on.

• Property Description: This needs to be more than just the street address. Include the full legal description and parcel numbers to eliminate any confusion about exactly which asset is being sold.
• Purchase Price and Deposit: Clearly state the total purchase price. Just as important, specify the amount of the earnest money deposit and spell out the exact conditions under which it becomes non-refundable or gets returned to you.
• Closing Date: Propose a target closing date. This sets a timeline for the whole process and helps manage everyone's expectations for due diligence, financing, and getting the final papers signed.

This diagram shows how these initial steps benefit you as the sponsor, giving you a clear path to securing the property, getting exclusivity, and building that all-important investor trust.

Establishing the Rules of Engagement

Beyond the price and property, your MOI needs to outline how everyone is going to behave from this point until the final purchase agreement is signed. These "rules of engagement" are often the few legally binding sections in the document.

The S&L crisis in the 1990s taught a hard lesson about the risks of vague preliminary agreements—an estimated 40% of deals fell apart because the terms weren't clear enough. Today’s MOIs are far more detailed, covering everything from broker commissions (typically a 3-6% split) to title surveys. Some even preview the ACH distribution plans for investors, a workflow that a platform like Homebase makes much easier to manage. You can learn more about how these agreements have evolved in this great piece on real estate investing on graystoneig.com.

The Exclusivity Clause (No-Shop Agreement): For a syndicator, this is gold. It’s a legally binding clause that prevents the seller from marketing the property or talking to other buyers for a set period. This gives you the breathing room you need to conduct your due diligence without looking over your shoulder.

Outlining Contingencies and Timelines

Finally, a well-drafted MOI gives you a clear roadmap with built-in escape hatches. These contingencies are your "off-ramps," letting you walk away from the deal without penalty if key conditions aren't met.

• Due Diligence Period: This clause sets a specific window, usually 30 to 90 days, for you to inspect the property, comb through the financials, and run any necessary assessments. It must also grant you and your team reasonable access to the property and all relevant documents.
• Financing Contingency: This is a big one. It makes your obligation to buy the property conditional on successfully securing financing. If you can't raise the capital from your investors or get the loan you need, this clause protects you and your deposit.

To help you get this right, here’s a breakdown of the critical clauses every sponsor should include in their MOI. These are designed to protect your interests and bring absolute clarity to the deal terms before you move forward.

Essential Clauses in a Memorandum of Intent to Purchase

Having these clauses clearly defined in your MOI not only protects you but also shows the seller you're a serious, professional operator who knows how to get a deal done. It sets a positive and professional tone for the entire transaction.

Understanding Binding vs. Non-Binding Terms

One of the first questions I always get from new syndicators is whether a memorandum of intent is legally enforceable. The answer isn't a simple yes or no—it's both, which is exactly what makes this document so useful. Think of an MOI as having two distinct personalities: one part is a firm, good-faith handshake, while the other is a serious, legally-binding contract.

Most of the big-ticket items—the purchase price, the proposed timeline, the closing date—are intentionally non-binding. This is a critical feature, not a bug. It gives both sides the wiggle room they need to adjust as new information surfaces during due diligence. You wouldn’t want to be legally locked into a price before you've had a chance to really dig into the property's financials and physical condition, right?

This non-binding nature allows the MOI to act as a roadmap for the deal without trapping you in a legal cage. It creates a strong "moral obligation" to move forward in good faith, but it doesn't force anyone's hand if the deal fundamentals change. This is exactly why it’s such a crucial stepping stone before you get into the nitty-gritty of a formal Purchase and Sale Agreement in real estate.

The Clauses with Legal Teeth

So, while the main deal points are flexible, a few key clauses in an MOI are absolutely binding and enforceable in court. These sections aren't about the final price or closing date; they're about governing the process of getting to a final agreement. They’re designed to protect both you and the seller while you're in the thick of negotiations and due diligence.

These legally binding provisions are the ones you need to pay close attention to:

• Exclusivity: This is often called a "no-shop" clause. It prevents the seller from marketing the property or entertaining other offers for a set period, typically 30 to 90 days. It gives you the exclusive window you need to do your work.
• Confidentiality: This clause ensures that all your negotiations and any sensitive information you exchange—like rent rolls or operating statements—stay private. It's a must-have when you're sharing proprietary financial data.
• Access for Due Diligence: This legally requires the seller to give you and your team reasonable access to the property and its records for inspections, audits, and general review.

Don't mistake the MOI's flexibility for a lack of seriousness. Breaching these specific terms has real legal consequences. If a seller signs an MOI with you and then violates the exclusivity clause by taking another offer, you could have grounds to sue for damages, like recovering the money you've already spent on initial due diligence. This legal weight is what creates a secure and professional environment for the deal to move forward.

Best Practices for Drafting Your MOI

Putting together a solid memorandum of intent to purchase is part art, part science. You're trying to clearly state your intentions while leaving enough room to negotiate the finer points later. When you get this document right from the start, you set a professional tone, protect your own interests, and lay the groundwork for a smooth closing.

It's tempting to blast through this early stage to get to the "real" deal, but seasoned syndicators know that the time you invest here pays off big time down the road. Treating the MOI seriously prevents costly misunderstandings and keeps the whole process from derailing.

Get Your Lawyer Involved Early

If there’s one non-negotiable best practice, it’s this: bring your attorney into the loop from day one. You and your broker are the experts on the business terms, but a real estate lawyer is the expert on making sure the language is airtight and protective.

Your legal counsel is your secret weapon in a few critical areas:
* Defining what’s binding: They’ll draw a sharp line between the non-binding deal terms and the clauses that are legally enforceable, like exclusivity and confidentiality. No gray areas.
* Spotting loopholes: A lawyer’s trained eye can catch vague phrasing that a seller could try to exploit later.
* Ensuring state compliance: Real estate laws are different everywhere. Your attorney will make sure your MOI is buttoned up according to local rules.

Aim for Clarity, Not Complexity

Your MOI needs to be understood by everyone at the table—no exceptions. Ditch the dense legal jargon when plain English will do. The whole point is to get everyone on the same page, not to confuse them.

The best MOIs act as a clear, concise roadmap. They should lay out the deal's skeleton—price, timeline, contingencies—with enough precision to create a strong "moral obligation" for both sides to negotiate in good faith, even if most of the document isn't legally binding.

This is about being specific without painting yourself into a corner. For example, state the proposed purchase price, but make it clear that it's contingent on you being satisfied with your due diligence findings.

Set Timelines That are Both Realistic and Strategic

Timelines are where a lot of deals can go sideways. If you rush your due diligence, you might miss a huge red flag. But if you let it drag on, the seller might get cold feet and walk away.

You have to be strategic with your dates:

1. Exclusivity Period: Lock down a "no-shop" period that gives you enough breathing room for your initial underwriting and to start talking to potential investors. A window between 30 and 90 days is pretty standard.
2. Due Diligence Window: Make this timeline line up with your exclusivity period. Be crystal clear about when it officially starts (e.g., after the seller has delivered all requested documents) and what it covers.
3. Proposed Closing Date: This gives everyone a target to aim for. It creates a sense of forward motion and keeps the deal from stagnating.

By thoughtfully drafting your MOI with these practices in mind, you turn a simple preliminary paper into a powerful tool. It secures your position at the negotiating table and paves the way for a successful transaction.

Common Questions About Memorandums of Intent

Even with a perfectly drafted document, you're bound to run into some practical questions when you're in the trenches with a memorandum of intent. Let's walk through a few of the most common scenarios that syndicators face at this critical stage.

What Happens If a Seller Ignores the No-Shop Clause?

This is a big one. A seller violating the "no-shop" clause is a serious breach of one of the few binding parts of the MOI. If you find out the seller is still marketing the property or talking to other buyers after signing your agreement, you have options.

Because the exclusivity provision is legally enforceable, you can pursue legal action to recover damages. These aren't hypothetical losses; we're talking about the real money you've spent so far—legal fees, third-party report costs, and all the other due diligence expenses. That's what gives the no-shop clause its teeth.

Can I Use a Standard MOI Template?

Absolutely. Using a standard MOI template is a smart way to start. It gives you a solid framework and makes sure you don't overlook any of the foundational clauses.

But—and this is a big but—you should never just fill in the blanks and hit send. Think of a template as your starting block, not the finish line. Every single deal has its own quirks, risks, and opportunities that a generic document can't possibly account for.

A template is a tool, not a final product. Always have your real estate attorney review and tailor the MOI to protect your specific interests and align with the deal's complexities before sending it to the seller.

How Long Should the Exclusivity Period Be?

Finding the right length for an exclusivity period is all about balance. You need enough time to do your work, but the seller wants to see progress. Typically, you’ll see these periods last anywhere from 30 to 90 days.

This window needs to be realistic. It should give you enough time to dig into the initial due diligence, review the property's financials, and start getting soft commitments from your investors. Try to line this up with your capital-raising timeline so you have a clear path to getting the deal funded without feeling rushed.

Ready to manage your next deal with confidence? Homebase provides the all-in-one platform to create professional deal rooms, manage subscription documents with e-signatures, and communicate seamlessly with your investors. See how you can streamline your syndication process.

DOMINGO VALADEZ is the co-founder at Homebase and a former product strategy manager at Google.