The pandemic forced us to make fundamental changes to the way we all live and work which has in turn, created new challenges but also opportunities for businesses of all sizes to think about how and where they do business. Many of us have got used to working from home but for most retail, manufacturing, hospitality and even some service industries, this is simply not an option, so business premises will be needed.
In order to ensure your real estate transaction (whether it be the grant of a lease, transfer of an existing lease, purchase of a freehold or anything related) is as streamlined as possible, well-drafted Heads of Terms are essential.
In this article Jane Winfield, Partner and expert commercial property lawyer, highlights how Heads of Terms can bring clarity and focus for both parties in the transaction, as well as provide the basis for subsequent negotiations.
Heads of Terms are essentially a document which sets out the terms of a commercial transaction that are agreed in principle between the parties involved. As commercial property lawyers, if we are provided with comprehensive Heads of Terms, this will enable us to create a legal document that accurately reflects what each party is looking to achieve in the transaction and the parties can then agree how to proceed by way of a definitive agreement.
If you’re about to undertake a commercial property transaction, talk to us today.
There are different Heads of Terms for different transactions. Where the grant of a lease is involved, there are a number of items you will need to consider; you may need to take advice from a number of different sources including your legal adviser, surveyor, bank (if loan finance is needed), building contractor, architect or accountant.
In commercial property leases it is common for the parties to agree a term of, say, 10 years but to include a right for the tenant to break the lease after the first five years of the term. This is called a “tenant break right”.
If you want flexibility, should you be thinking about requesting a break right? Is it reasonable for the landlord also to be granted a break right? If so, what is the quid pro quo for the landlord having flexibility? What conditions are to be attached to the exercise of the break right? How often would you want to have the break right available and on what period of notice should it be exercised? Is the break right to be personal to you as the tenant or to anyone who may take the lease from you in the future?
It is important that all correspondence relating to any proposed property transaction is marked “subject to contract” so that there is no possibility that the heads of terms become legally binding and therefore constitute a contract in themselves. Also, be aware that a contract or a lease does not have to be written for it to be binding.
At Tees, we are very happy to advise you on Heads of Terms once they have been drafted, outlining any particular concerns and identifying any areas where further clarification is needed. We’re here to ensure you’ll be well set up for the property side of your exciting new venture.
We have many specialist lawyers who are based in:
Cambridgeshire: Cambridge
Essex: Brentwood, Chelmsford, and Saffron Walden
Hertfordshire: Bishop’s Stortford and Royston
But we can help you wherever you are in England and Wales.
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All legal services provided by Tees are regulated by the Solicitors Regulation Authority. Tees is a trading name of Stanley Tee LLP is authorised and regulated by the Solicitors Regulation Authority (SRA Number 464615) and is registered in England and Wales number OC327874.
All financial services provided by Tees are regulated by the Financial Conduct Authority. Tees and Tees Wealth are trading names of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales number 4342506. Registered office address Tees House, 95 London Road, Bishop’s Stortford CM23 3GW.
Copyright © 2025 Tees Law. All rights reserved.
Financial services:
Legal notices | Privacy notice
Legal services:
Legal notices | Privacy notice
All legal services provided by Tees are regulated by the Solicitors Regulation Authority. Tees is a trading name of Stanley Tee LLP is authorised and regulated by the Solicitors Regulation Authority (SRA Number 464615) and is registered in England and Wales number OC327874.
All financial services provided by Tees are regulated by the Financial Conduct Authority. Tees and Tees Wealth are trading names of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales number 4342506. Registered office address Tees House, 95 London Road, Bishop’s Stortford CM23 3GW.
Copyright © 2025 Tees Law. All rights reserved.