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LOI template for buying a business or a building in Toronto

Buying a business or a building in Toronto? Draft your letter of intent here, set to Ontario law and Canadian dollars. A Toronto building pays two land transfer taxes, so the cash you need at close is higher than the price suggests.

What is a letter of intent?

A letter of intent (LOI) is a short letter a buyer sends a seller setting out the main terms of a purchase before the binding purchase agreement is signed. Raises.com® offers a free letter of intent generator on this page that writes one for a business or a building and downloads it as a Word file, a text file or a PDF.

What goes in it: The price and how it is paid (cash at close, a seller note, an earn-out, rollover equity, debt), the due diligence period, the financing condition, exclusivity, confidentiality, expenses, governing law and a target closing date.
Is it binding?: Mostly no. The obligation to buy and sell usually binds only once both sides sign the purchase agreement. The sections the letter names as binding, usually exclusivity, confidentiality and expenses, bind as soon as it is signed.^{4, 10}
How long exclusivity runs: Usually 30 to 90 days, depending on the deal. The generator starts at 60 and you can change it.⁴
What it costs: Nothing here: no account and nothing to pay. Your own lawyer's review is the one cost.

Write your Toronto letter of intent

Start with your first name, email and mobile, and the generator opens. Your terms save as you type, so the draft is still there when you come back. Preset to Province of Ontario law and Canadian dollars; change anything.

What changes in Toronto

The local facts that change the letter or the cash you need, each checked on its source page on 2026-11-13.

The law on letters of intent in Ontario

Ontario courts ask whether the parties meant to be bound. In Wallace v. Allen the Court of Appeal for Ontario held that a letter of intent was binding, relying in part on its reference to "this agreement" and on what the parties did after signing, such as starting work in the business and announcing the sale to staff. Keep the non-binding wording and watch what you say and do once it is signed.¹

In Bhasin v. Hrynew (2014 SCC 71) the Supreme Court of Canada recognized a general organizing principle of good faith and a duty of honest performance in carrying out a contract. The binding sections of your letter, such as exclusivity and confidentiality, are contract terms, so perform them honestly.²

Two land transfer taxes on a Toronto building

A building purchase in the City of Toronto pays the Ontario land transfer tax and Toronto's own municipal land transfer tax. For property that is not one or two single-family homes, both use the same brackets: 0.5% up to $55,000, 1.0% from $55,000 to $250,000, 1.5% from $250,000 to $400,000 and 2.0% above $400,000, so the land transfer cost is roughly double what the same building pays elsewhere in Ontario. Toronto's higher graduated rates from April 1, 2026 apply to homes with one or two single-family residences priced above $3 million, not to a commercial building. A business bought by a share purchase does not transfer land, so check with your lawyer whether the taxes apply to your structure.^{3, 4, 5}

Worked example: a CAD $1,500,000 building

Ontario land transfer tax: CAD $26,475
Toronto municipal land transfer tax: CAD $26,475
Total at closing: CAD $52,950

Add it to the closing costs in the deal check above.

The Canada Small Business Financing Program

The federal program is open to businesses with gross annual revenues of $10 million or less. The maximum is $1.15 million per borrower: up to $1 million in term loans, of which no more than $500,000 can go to equipment and leasehold improvements and no more than $150,000 to intangible assets and working capital, plus a line of credit up to $150,000. The purchase of the eligible assets of an existing business may qualify; a share purchase does not. The registration fee is 2% of the loan, and a floating-rate term loan is capped at the lender's prime rate plus 3%.^{6, 7}

Free local advice

The City of Toronto's Small Business Enterprise Centre offers free guidance, including one-on-one consultations, business plan reviews and information on funding, with advisors at the Scarborough and North York civic centres and online.⁸

The two sample letters, the binding clauses state by state and LOI vs term sheet are on the free LOI template and letter of intent generator page.

What goes in a letter of intent

The generator writes each of these, in this order. The ones marked binding are the customary carve-outs.

Clause	What it says	Binding?
Purchase price	The total price and the adjustments that will be settled in the purchase agreement.	No
Structure	How the price is paid: cash at close, seller note, earn-out, rollover equity.	No
Financing	How the buyer funds the cash at close, and whether closing depends on getting the loan.	No
Deposit	Optional: what is paid on signing the purchase agreement and when it comes back.	No
Due diligence	How long the buyer has to review the business or the building, and what the seller opens up.	No
Definitive agreement	The purchase agreement both sides will negotiate, and who drafts it.	No
Conditions and closing	What has to be true to close, and the target date.	No
Transition support	Business only: the seller helps hand the business over after closing, on terms the purchase agreement sets.	No
Exclusivity (no-shop)	The seller stops talking to other buyers for a set number of days.	Yes, by default
Confidentiality	Both sides keep the terms and the information private.	Yes, by default
Expenses	Each side pays its own lawyers and accountants.	Yes, by default
Governing law	Which state's or province's law applies.	Yes, by default
Non-binding letter	Everything but the named binding sections waits for the purchase agreement, and either side may end talks before then.	Yes

After the LOI: diligence to close

The signed letter starts the clock. Diligence runs, the lawyers draft the purchase agreement, and the money gets lined up: the lender, any seller note, and the equity that covers the gap the deal check shows.

Lenders ask for the same pack: two years of financials month by month, six months of bank statements, two years of tax returns and personal financial statements. On Cody Sechelski's acquisition, 25 capital providers saw the same data room and the same one-page summary in parallel. 24 said no and one funded.^{21, 22}

The free Raises.com® AI plan builds the capital stack for your deal from one message, and the LOI to close guide shows what gets built between the letter and the wire, and who does each piece.^{2, 3}

Get your free plan Read LOI to close

Want to talk it through? Book a strategy call with one of the advisors. Book a strategy call

How the generator works

Pick a business or a building
The draft changes with it: a business gets an asset or share purchase, a working capital adjustment and transition support; a building gets title, leases, rent roll and the closing adjustments.
Type the price and how it is paid
Cash at close is worked out for you: the price less the seller note, the earn-out and the rollover.
Set diligence, exclusivity, financing and closing
Choose which sections bind on signing. The rest stays non-binding until the purchase agreement.
Copy, print or download
Download a Word file or a text file, or print to PDF. Then have your own lawyer review it before it goes to the seller.

Toronto letter of intent questions

Is a letter of intent binding in Ontario?

Only as far as the parties intended. Ontario courts look at the wording and at conduct after signing: in Wallace v. Allen the Court of Appeal for Ontario found a letter of intent binding, in part because it referred to "this agreement" and the parties acted on it. Keep the business terms clearly non-binding, name the sections that bind, and have an Ontario lawyer review it.

How much land transfer tax is due on a $1.5 million building in Toronto?

On a building that is not one or two single-family homes, the Ontario land transfer tax on $1,500,000 is $26,475 and Toronto's municipal land transfer tax is another $26,475 on the same brackets, $52,950 in total at the published rates. Confirm the figure with your lawyer before closing.

Can a federal small business loan fund buying a business in Toronto?

The Canada Small Business Financing Program can finance the purchase of the eligible assets of an existing business, up to its limits ($1.15 million per borrower in total). It cannot finance a share purchase, so an asset purchase is the structure that fits it.

What is a letter of intent (LOI)?

A letter of intent is a short letter a buyer sends a seller setting out the main terms of a purchase: the price, how it is paid, the due diligence period, exclusivity and the target closing date. Most of it records the deal both sides intend to sign later in a purchase agreement and is written as non-binding. A few sections, usually exclusivity, confidentiality, expenses and governing law, are written to bind as soon as both sides sign.

Is a letter of intent legally binding?

Only the sections it names as binding, if it is written well. The obligation to buy and sell usually binds only once both sides sign the purchase agreement. Courts look at the wording and at what the parties do after signing: in Wallace v. Allen the Court of Appeal for Ontario held a letter of intent binding, in part because it spoke of "this agreement" and the parties acted on it. Use clear non-binding language and have your own lawyer review the letter.

Can you back out of an LOI?

Yes, if the letter is non-binding and says either party may end negotiations before the purchase agreement is signed, as the draft from this generator does. The sections written as binding, such as exclusivity and confidentiality, still bind after you walk away, so keep to them. Check the wording first: a letter that holds every essential term and a clear intent to be bound can be enforced like a contract.

What should an LOI to buy a business include?

The price and how it is paid (cash at close, a seller note, an earn-out, rollover equity, bank or SBA debt), whether it is an asset or a share purchase, a working capital adjustment, the due diligence period and what the seller opens up, the financing condition, exclusivity, the target closing date, transition support from the seller, which sections are binding, and signature lines.

What goes in a commercial real estate LOI?

At least the parties, a description of the property, the price, any earnest money deposit and who holds it, the due diligence period and when it starts, and the closing date. Add the financing condition, the leases and a current certified rent roll, tenant estoppel certificates, title and survey, the closing adjustments for rents, deposits and taxes, exclusivity, which sections bind, and signature lines.

Can I get this LOI template in Word, PDF or Google Docs?

Yes. Download Word builds a .docx file in your browser, Print or save as PDF prints the letter alone, and Download .txt and Copy text give you plain text. For Google Docs, upload the Word file to Google Drive and double-click it to open it in Docs.

Is this LOI generator free?

Yes. There is no account to create and nothing to pay. Enter your first name, email and mobile and the generator opens, and your terms save as you type so you can come back to the draft. Copy it, print it to PDF, or download it as a Word or text file.

What happens after the LOI is signed?

Due diligence starts, the lawyers draft the purchase agreement, and the money gets lined up: the lender, any seller note, and the equity that covers the gap. The Raises.com® LOI to close guide walks through each step, and the free Raises.com® AI plan sizes the capital stack for your deal.

Should a lawyer review my LOI?

Yes. This generator writes a conventional starting draft, not legal advice. The law that governs your deal, the structure, taxes and the binding sections all depend on facts a template cannot see, so have your own lawyer review and edit the letter before you sign or send it.