Understanding a Heads of Agreement
- Jorden Elabbasi
- 1 day ago
- 1 min read
How an HOA Works in Practice
Before a commercial lease is signed, there’s often an important step in the negotiation process: the Heads of Agreement.
A Heads of Agreement brings together the main commercial terms that have been negotiated for the tenancy. This will usually cover things like the rent, lease term, options, incentives, outgoings and when the lease will commence.
It gives both parties a clear understanding of what has been agreed before the formal lease documentation is prepared.
Why an HOA Matters
We come across Heads of Agreement regularly in our tenant representation work, and this is an important stage in the process.
There can be a lot more to consider than the headline rent, particularly when you look at how the terms will affect the business over the life of the lease.
For our clients, we look closely at the detail and consider how the proposed terms work for their business. That might include the rent review structure, lease term and options, incentives, outgoings, commencement date and any conditions that are particularly important to how the business operates.
Taking the time to work through these details early also helps the formal lease process progress more smoothly, with everyone clear on the commercial terms that have been negotiated.
At Costello Group, we work with our clients throughout the Heads of Agreement process, reviewing and negotiating the commercial terms and making sure they align with the business, its property requirements and longer-term plans.
Taking the time to get those commercial terms right from the outset can make a significant difference over the life of the lease.
