When it comes to negotiating and documenting a real estate joint venture, it is common to employ a letter of intent (LOI) — also commonly referred to as a term sheet or memorandum of understanding (MOU) — in the early stages of the negotiations. Because letters of intent vary greatly in structure and content, it can be difficult to know exactly where to focus attention when it comes time to review and negotiate the letter of intent. This article is intended to highlight some threshold considerations.

Letters of intent are, by and large, nonbinding agreements that serve as the foundation for documenting a joint venture or other transaction. Although letters of intent are often thought of as “agreements to agree” or “agreements to negotiate in good faith,” they actually fall short of either of those descriptions in that, with a few exceptions, they intentionally impose no legal obligation on either party.

Nevertheless, letters of intent have become a common a