Selling or Leasing Commercial Property – The Heads of Terms

Whether you are using a commercial property agent to help you find a buyer or a tenant for your property, one of the first things you will need to do is produce the Heads of Terms.

The Heads of Terms are effectively the general terms of the sale or transfer. They do not form part of the contract itself, and for this reason they have the words ‘subject to contract’ clearly marked on them, but they do help the solicitors to ensure that the basic terms are covered by the Lease or Contract of Sale.

Some of the terms that are covered by a Heads of Term for a lease are listed as follows:

  • The parties
  • The legal representatives of each party
  • The agents
  • Whether the property is being sold or leased or sub-leased
  • The price (if a sale) or Premium (if lease or sub-lease, if applicable)

Where it is a lease or sub-lease, then the following terms will also need to be added to the Heads of Terms:

  • Term of the lease/sub-lease
  • The rent payable and how often
  • Rent Reviews
  • Break Clauses
  • Insurance – whose responsibility
  • Repair – whose responsibility
  • Security of Tenure – whether the lease will be contracting out of the provisions of sections 24 to 28 of the Landlord and Tenant Act 1954

If you are considering selling or leasing your commercial property, and you are not using an agent, then it will be advisable to instruct a solicitor to get involved at the very beginning and who can help you draft the Heads of Terms.

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