Letters of Intent for Data Center Land Deals: Binding Terms, Exclusivity and Pitfalls

A letter of intent is a short document that records the business terms the buyer and seller have agreed to negotiate: price, acreage, deposits, the length of the diligence period, closing timing and who pays which costs. Its job is to stop the parties from spending legal fees on a full purchase and sale agreement before they agree on the basics. Most practitioners describe the typical LOI as non-binding overall, with a handful of clauses carved out to bind immediately.¹

In data center land deals, the LOI often comes earlier and carries more weight than in ordinary industrial sales. Developers move fast on parcels near transmission and substations, and they want to lock up a site before competitors or the landowner’s neighbors hear about it. A public example shows the pattern: in February 2025 a joint venture announced an LOI to acquire about 200 acres in Ector County, Texas, for a planned 250 MW facility, with the acquisition contingent on due diligence and definitive documents expected within ninety days.⁶ The closed deal in July 2025 covered 235 acres, and the buyer separately held an exclusive LOI on another 203 contiguous acres.⁷⁸

Public bodies sign LOIs too. In early 2026, officials in Lauderdale County, Mississippi, and a data center developer signed a letter of intent for the developer to buy about 300 acres at $20,000 per acre, roughly $6 million in total.⁹ Whether the seller is a family, a company or a county, the LOI sets the frame that the later contract, whether an option agreement or a straight purchase, will be negotiated inside. Our guide to buying, optioning or leasing data center land covers that structural choice.

A well-drafted LOI says, in one clear clause, that it is not a contract to buy or sell and that no party is bound until a definitive agreement is signed and delivered, except for the provisions it lists as binding. Those carve-outs usually cover exclusivity, confidentiality, each side’s own expenses, public announcements and governing law.¹ Everything else (price, acreage, deposits, contingencies) is stated as the parties’ present intent.

The label alone does not settle the question. Miller Nash notes that language inside a letter titled “non-binding” can still create binding obligations, and that courts “do not like to invalidate agreements,” so they often find enforceable provisions the parties did not expect.¹ The classic warning is Texaco v. Pennzoil, where a jury awarded $10.53 billion against Texaco for interfering with a preliminary deal between Pennzoil and Getty Oil that the Getty side had treated as not yet binding.¹⁰ The Texas appellate court weighed four factors: whether a party expressly reserved the right to be bound only by a signed writing, whether there was partial performance, whether all essential terms were agreed, and whether the size and complexity of the deal would normally call for a formal written contract.⁴

Good faith clauses deserve special care. In SIGA v. PharmAthene, the Delaware Supreme Court held in 2013 that an agreement to negotiate in good faith in accordance with a term sheet is enforceable, even though the term sheet itself carried a “Non Binding Terms” footer, and that expectation damages are available if the parties would have reached a deal but for one side’s bad faith.³ The court later affirmed a damages award on remand in December 2015.¹¹ Where an LOI says the parties “will negotiate in good faith,” assume it may be enforced as written.

For a buyer, exclusivity is usually the point of the LOI. It stops the landowner from shopping the price to another developer while the buyer spends money on surveys, environmental work and utility conversations. Practitioners stress that a no-shop clause protects the buyer only if it is drafted as one of the binding provisions; otherwise a seller can lawfully keep talking to others.¹

Expiration matters as much as the period itself. A Kirkland & Ellis analysis of a Georgia dispute describes an LOI with a 45-day exclusivity period that the seller allowed to lapse while talks continued; the court held that the seller then lost the protection of the letter’s non-binding provisions.² The practical lesson for both sides is to state what survives expiration, and to sign a short amendment rather than letting exclusivity run out informally.

• Length: match it to the work. A window of a month or two may cover a desktop screen and early utility contact, but rarely a full load study.
• Scope: name the parcels and any adjoining land the buyer may also want, as the Ector County buyer did with its exclusive LOI on contiguous acres.⁷
• Confidentiality: cover the price, the buyer’s identity and the diligence reports, and say how long it lasts. Our guide to confidentiality and project code names covers NDAs in more depth.
• Announcements: require consent for any press release. A press conference has been used as evidence that a “non-binding” deal was in fact agreed.¹

A generic land LOI covers price, deposit and closing. A data center LOI should also say how the buyer’s biggest unknowns will be handled, because those unknowns drive how long the deal stays open. A land use attorney advising landowners notes that buyers in these deals use the due diligence period to obtain permits and approvals for their intended use, that the period “can be very long, sometimes years,” and that a buyer who does not get approvals can terminate and walk away.⁵

Deposit structures in public term sheets show how risk shifts over time. A term sheet posted publicly for an Arkansas data center project set a 120-day inspection period and $200,000 of earnest money held in an interest-bearing account and credited to the price, with portions becoming nonrefundable on a 30/60/90-day schedule and a second deposit due after the inspection period.¹² Our guide to due diligence periods and purchase contingencies goes deeper on those mechanics; the LOI is where the outline gets set.

An LOI is a starting point, and terms often move once diligence begins. The Ector County sequence is a useful public benchmark because each step was announced: the LOI in late February 2025, a purchase agreement dated July 17, 2025, and a closing announced at the end of that month, with the acreage growing from about 200 to 235 acres along the way.⁶¹³⁷

That pace is fast for a raw land deal. Many data center sites take longer because the buyer needs a utility load study or a rezoning before it will commit hard money, and the LOI’s diligence and extension terms carry straight into the contract. When terms change, update the LOI or let the definitive agreement supersede it expressly, so there is no argument later about which document controls.

Landowners and buyers read the same letter for different risks. The landowner worries about tying up the land for months with little money at risk; the buyer worries about spending on diligence and then being outbid. A short scorecard keeps both views in front of the reviewer.

1. 01Confirm the non-binding statement is clear and consistent, and that the binding list is short and deliberate.¹
2. 02Read every “shall,” “will” and “agree” in the non-binding sections; that wording is where unintended obligations come from.¹
3. 03Check the exclusivity length against the diligence plan, and add what survives if it lapses.²
4. 04Make the power and zoning questions explicit, using our site due diligence checklist as a guide.
5. 05Have a real estate attorney in the property’s state review the letter, since enforceability turns on that state’s law.⁴

Landowners weighing an offer can also read our guide to selling or leasing land to a data center developer. If you want an independent view of whether a parcel can actually support the use before you sign, you can get a site reviewed.