When is a heads of agreement binding

Legal Practitioners at Atkinson Vinden are members of the scheme. Blog Articles and legal news from the Atkinson Vinden Team. Share this Back to Blog. First Name:. Connect with us. Even if a heads of agreement is signed, we recommend that a formal lease be drawn up before possession of the property is granted or taken.

Disputes between parties often arise where a lessee enters into possession of a property before a formal lease document is signed, and the parties later disagree on terms of the lease. West Perth Legal regularly assist landlords and tenants with drafting of leasing documents, including heads of agreement and formal lease agreements, and representing clients on lease-related disputes.

Contact us for a complimentary discussion about your leasing questions. Property and Leasing ,. A heads of agreement for lease can be legally binding or non-binding. What is a lease heads of agreement? When does a heads of agreement for lease constitute a binding lease agreement? By Connor James. Why are they used? There are a number of benefits to using heads of agreement including that they: can record the terms that have been agreed to date; provide a structure for final documentation; assist in the drafting of final documentation; and allow the parties to continue negotiations in good faith.

Are heads of agreement enforceable? There are four recognised categories of heads of agreement and these are: where the parties have reached agreement on the terms of a contract and agreed to be immediately bound but wish to restate those terms in final transactional documents; where the parties have reached agreement on all of the terms of the transaction and intend to be bound by them but have made performance conditional upon execution of final transactional documents; where the parties agree to be immediately bound but expect to make a final transactional contract that will substitute the heads of agreement and add additional terms; and where the parties do not intend to be bound by the heads of agreement.