Renting a Commercial Property – Drafting ‘Heads Of Terms’ (HOTS)

Tenants Commercial Property Guide The Heads of Terms is a preliminary document to outline the primary terms that both parties agree to, relating to the commercial property. Find out all the facts you need to know about HOTS from the perspective of a commercial property tenant.

'Heads of Terms' (HOTS)

Any proposed transaction begins with drafting a document, which clearly states the primary terms that both parties have agreed to; a ‘Heads of Terms’ (HOTS).

A HOTS is not legally compulsory to produce but is recognised as a draft of the main contract.

This means that both parties will only be subject to the comprehensive agreements that are described within the main contract. When both parties agree the HOTS, the legal work can begin! The HOTS can be a simple task and generally results in a quick agreement. The landord’s or your own agent can draft the HOTS for approval.

When dealing with an overseas company, the HOTS will be a key document in order to successfully complete a deal. Both parties are required to clearly state their requirements of the draft to the opposite company, as well as clearly identifying the requirements that the other party have. This should eliminate any confusion from either side, and is considered a significant benefit of the HOTS. It should also be noted that a professional translator should be hired.

In many cases, either business might understand some aspects of the others language, but without a clear understanding information can become confused. This can potentially lead to disagreements over what was initially agreed within the draft. If this happens, it could result in the termination of the main contract which is a loss for both sides.

Within a HOTS agreement, there are various different points, which have to be understood and to be agreed by both parties, including:

  • The nature of the agreement
  • The rental value, currency and the payment method
  • A description of the transaction
  • A proposed timeline of the process (up until completion of the transaction)

It is essential for both parties to be able to completely understand the details of the agreement stated. With a translation completed by a legal translator, both parties will be provided with the agreement written in their native language, which clearly sets out all important points. Keeping both parties well informed of the HOTS, will elimination confusion and provide a clear legal framework to complete the transaction.

It is therefore highly recommended that you seek professional advice from a solicitor who specialises in commercial property law.


Registering with MOVEHUT is easy, simply visit out sign up page.