Heads of Agreement & Lease
Following site selection, the Heads of Agreement sets out the core commercial terms and environmental expectations and parameters of the relationship. Heads of Agreement are normally prepared by the tenant and building owner representatives, before being handed over to the respective legal departments for finalisation.
As well as costs, term and other agreed incentives, a best practice Heads of Agreement should set out the level of expected building performance, reporting requirements, method and frequency of communication between the parties, and dispute resolution process. Legal departments are charged to de-risk contracts, but best practice leasing requires a reasonable retention of space for evolving collaboration between owner and tenants. This intention should be clearly articulated to the lawyers finalising the contract.