Is it common practice to require escrow money for a LOI?
Hey team! I am doing LOI for 12-unit commercial property. They want escrow money at 2% of asking to submit a LOI. Is this normal? FYI. This is my first commercial property I am pursuing. We didn't do a LOI with my other 3-unit property, just the written offer. I feel like LOI shouldn't require any money up front, but not sure on this. Quick background, the reason we are doing a LOI is because seller agent said to get more information about the property we needed to do this. Any feedback is appreciated. Thanks,
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Hell no. LOI is not a legally-bindng document. Escrows are only submitted with a signed PSA.
Perhaps they just want proof you have the funds. Show them the money, but don't GIVE them the money.
If they are weird and insist on having you put money in Escrow, and you are willing, I'd only give it to reputable Title company along with paperwork indicating that there is no contract requiring you to keep your money there and you can withdraw it any time.