Memorandum of Understanding - MOU

We thought living in a tiny house would be awesome when we first bought ours, but after six months of banging our head on the low loft ceiling and storing all of our clothes under the fold-out table in the living-slash-dining space, we’re ready to upsize. We had been planning on using a realtor to sell our tiny house, but then our friend Patty came over and said she wanted to buy it. “Fantastic,” we say, but since we’re parked out in the middle of nowhere and can’t really draw up a contract at the moment, we decide to make an MOU instead.

An MOU, or “memorandum of understanding,” is basically the same thing as a letter of intent. It’s a document that establishes an agreement between two or more parties, and it’s usually a precursor to a more formal contract.

So in this case, we sit down with Patty and scribble down the deets of the deal: she’ll pay us $20,000 total for our itty bitty abode, including a down payment of $4,000 and monthly payments due the first of the month every month after that. She’ll take possession as soon as the down payment transfers, and we’re shooting for a closing date 30 days from now. We each sign the document in blood—or with a pen, if there's one handy—and then, when we return to civilization, we can turn our MOU into something more official and legally binding.