Heads of terms agreements
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Contact our teamA heads of terms agreement serves as the blueprint for property transactions, capturing the main points of understanding between the parties involved before the formal contract is drawn up.
While not legally binding in its entirety, this document outlines the key terms and expectations, offering clarity and direction as the parties move towards a final agreement.
At Moore Barlow, we appreciate the significance of this stage in the process. By ensuring that your heads of terms agreement is precise and well-structured, we help set the tone for a smooth and efficient property transaction, avoiding misunderstandings and keeping negotiations on track.
What is a heads of terms agreement?
The heads of terms agreement, sometimes referred to as a memorandum of sale, is a preliminary document that records the agreed-upon principles and terms for a property transaction. This could include the purchase price, expected completion date, any conditions to be fulfilled before contract signing and the roles of each party.
While most of the agreement is not legally binding, it plays an important role in framing the transaction, ensuring that both parties are clear on what has been discussed and what they aim to achieve. Certain elements, like confidentiality clauses or exclusivity periods, can be legally binding, protecting sensitive information or guaranteeing that negotiations are not undermined by other parties.
Richard Hughes
Partner | Commercial Property, Real Estate, Real Estate Finance
Our role in drafting heads of terms agreements
At Moore Barlow, we are committed to providing expert legal guidance to ensure your heads of terms agreement is drafted effectively. We help clients articulate the key terms of the deal, balancing clarity and flexibility, so that the document serves as a strong foundation for the final agreement. Whether you are a landlord, developer, or property buyer, we offer insights into the critical areas that should be covered, such as timelines, responsibilities, and potential deal-breaking conditions.
Our goal is to help streamline the property transaction by reducing ambiguity, outlining the major components of the deal, and ensuring all parties are aligned from the outset. With careful attention to the specific needs of your transaction, we guide you through the drafting and negotiation process.
Why Moore Barlow stands out
What makes Moore Barlow distinct is our deep knowledge of property law combined with a practical approach to drafting heads of terms. We understand that every property transaction is different, which is why we take the time to tailor the agreement to your unique circumstances. This approach not only protects your interests but also anticipates and mitigates potential challenges before they arise.
By focusing on detail from the start, we help avoid issues later in the process. Our extensive experience allows us to foresee and address concerns that could delay or complicate the final contract, making sure that the heads of terms effectively guides the transaction to a successful conclusion.
Meet our real estate finance experts
Richard Hughes
Partner | Commercial Property, Real Estate, Real Estate Finance
Jo Farr
Partner | Commercial Property, Real Estate, Land Development, Real Estate Finance
Susannah Marsh
Partner | Financial Services Litigation, Real Estate Finance
Sam Ho
Senior Associate | Commercial Property, Real Estate, Real Estate Finance
Nellie van der Lande
Senior Associate | Commercial Property, Landed Estates and Farming, Real Estate Finance, Rural Services
Callum Leary
Partner | Commercial Property, Real Estate, Real Estate Finance
Sharon Mays
Senior Associate | Commercial Property, Real Estate, Land Development, Real Estate Finance
Who benefits from our heads of terms services
We work with a wide range of clients, including property investors, developers, commercial landlords, and tenants. Whether you’re buying, selling, or leasing commercial or residential property, our heads of terms services are designed to provide clarity and protect your interests.
From complex commercial transactions to straightforward lease agreements, we ensure that your heads of terms document is tailored to meet the specific demands of your project. This helps set the foundation for a productive and straightforward path to completion.
Contact us
If you’re looking to draft or negotiate a heads of terms agreement as part of your property transaction, the team at Moore Barlow is ready to assist. Our experienced solicitors can ensure that your agreement is clear, comprehensive, and aligned with your goals. Get in touch with us today to discuss your needs and see how we can help structure a successful property transaction.
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Frequently asked questions
What are the benefits of having a heads of terms agreement?
A heads of terms agreement offers several benefits. It clarifies key terms early on, ensuring both parties align on the main points of the deal before drafting a formal contract. This can streamline negotiations, reducing misunderstandings and saving time.
Heads of terms also provide a roadmap, outlining roles, responsibilities, and timelines, helping to manage expectations and guide the transaction. Although non-binding, they establish trust, setting the groundwork for a smoother, more efficient path to a final agreement.
What to include in heads of terms?
Heads of terms should outline the key elements of a proposed agreement, including:
- Names and contact details of all parties.
- A description of the property, business, or assets involved.
- Agreed price, rent, or payment terms.
- Responsibilities of each party, such as timelines for completion or conditions for sale.
- Expected deadlines for completing due diligence, signing contracts, and other key stages.
- Any conditions that must be met before the final agreement, like planning permission or works to be undertaken.
- Agreement on maintaining confidentiality during negotiations.
- Terms that prevent either party from negotiating with others for a set period.
Heads of terms are non-binding but provide a clear roadmap for the final agreement.
What comes after heads of terms?
After agreeing on heads of terms, the process typically moves to due diligence, where the buyer or tenant verifies key details through financial and legal checks. Solicitors then draft the formal contract, incorporating agreed terms. Following any further negotiations, both parties sign the contract, finalising the deal and making it legally binding.
Why are heads of terms not legally binding?
Heads of terms are not legally binding because they serve as a preliminary agreement outlining the main terms of a potential deal, without finalising the details. They are intended to set the framework for negotiations and clarify intentions, allowing parties to agree on key points before drafting a formal contract.
As they are generally marked “subject to contract,” they indicate that neither party is legally obligated until a final, binding agreement is signed, preserving flexibility and reducing risk during the negotiation process.
How long does an option agreement last?
An option agreement typically lasts between 6 months to 3 years, but the duration can be tailored to suit the needs of both parties. The length is agreed upon when the contract is signed, allowing the buyer time for due diligence, such as securing planning permission or financing.
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