COMMERCIAL PROPERTY FOCUS - Adam Mayer - Heads of Terms


Adam Mayer shares his concerns that many tenants fail to call their solicitor at the point they are considering taking a lease of premises.   Adam explains "it can be daunting for a tenant who has seen the ideal premises, whether it's a first lease or new/additional unit, to negotiate the heads of terms suggested by the landlord or letting agents.   Many tenants believe those are simply the terms and they cannot offer anything else - or they do not understand the terminology.   For example, many tenants calls us to warn that particulars are on the way - but have not thought to chat those terms over before they are signed off.  Heads of Terms detail the lease terms that the landlord solicitor will use to draft the lease - and to try and re-negotiate after the lease has been drafted can be problematic.   

The classic one is tenants agreeing to FRI lease.  Many don't understand this term means "fully repairing and insuring" and can place a heavy burden of repairing responsibility onto a tenant shoulders.  Many units are not in good repair and condition and simply accepting FRI means the tenant is likely to pick up heavy dilapidations bill at the end of the lease term.   Simply negotiating a schedule of condition at the outset so the tenant and landlord agree the condition the building is to be handed back in - is just one way of reducing the end of term liability.  Another is to agree the tenant just maintains the interior and not structural parts.   Either way - important terms like FRI can be banded about without the tenant appreciating the ways this can be limited".

Adam goes on to explain "at Nowell Meller we offer prospective tenants input on the draft heads of terms - not only to help reduce liability where we can - but to ensure all the tenant requirements are met - whether it relates to a break clause - permitted use and trading hours - or works the landlord may have agreed to undertake.     This helps avoid lengthy debates with the landlord solicitor or letting agents that the Heads of Terms are in an agreed format and the lease has been drafted accordingly.  If the Heads fit the bill then the draft lease should also reflect those terms.  Any tenant is welcome to give our experienced commercial property team a call for pointers and advice before they confirm the Heads are agreed.    Some tenants feel out of their depth then going back to re-negotiate points but we can also help with this if necessary.  We enjoy good working relationships with many local letting agents who appreciate that if a tenant has not understood terms before finalising the Heads that it's important to put that right at an early stage to save loss of time completing the lease down the line".

If you would like advise in relation to Heads of Terms please do not hesitate to call Steve Kirwan, Debby Hackney or Adam Mayer on 01782 813315.