The Deal Starts Well Before the Contract

Heads of Agreement

What Warehouse Buyers in Queensland Need to Know

It looks informal. It rarely is.

You’ve had good conversations with the agent. The deal is coming together. Then you’re handed a Heads of Agreement, or a Term Sheet, or an Expression of Interest, or something similar.

It’s presented lightly. Preliminary. Just the broad commercial terms. Nothing locked in yet. The agent might even say it’s non-binding.

So you read it quickly. Price looks right. Settlement period looks right. And you feel the pull to keep things moving. You don’t want to lose the deal. You don’t want to look difficult.

Here’s the problem: that document can shape, and sometimes lock in, the deal before the formal contract is ever drafted.

The label matters less than you think. What matters is the wording, the conduct that follows, and the commercial position you’ve put yourself in by signing. By the time the formal contract arrives, some of your negotiating room may already be gone.

That’s not a reason to refuse to sign. It’s a reason to know exactly what you’re signing.

What you’re actually signing

You’re being asked to agree to commercial terms before a formal contract exists. In a warehouse transaction that typically means price, settlement period, deposit, and sometimes basic conditions.

It might be called a Heads of Agreement, a Term Sheet, an Expression of Interest, a Letter of Intent, or an Offer to Purchase. The name doesn’t decide whether it binds you. The wording does. And even if it’s described as non-binding, some clauses like confidentiality for example, are intended to be enforceable from the moment you sign.

In Queensland, courts look at what the parties intended and what the document actually says, not just the heading at the top of the page. If the terms are clear and final, and you’ve both acted as though the deal is done, you may have real exposure before a formal contract exists.

Don’t assess it by how it’s described to you. Assess it by what it says.

Where you can lose ground before the contract is drafted

The clauses that bind you from the start

Confidentiality obligations are almost always immediately binding. So are exclusivity clauses, which stop the vendor negotiating with other buyers, but only for a defined period.

The terms that may already be final

Depending on the actions of the parties, after price, settlement date, and the parties are recorded as agreed, a court may treat those terms as final, even if the document is expressed as subject to contract. The formal contract then fills in the detail. It may not reopen the commercial fundamentals.

That matters because the issues you haven’t yet examined, the lease structure, outgoings, GST treatment, building condition, may need to be resolved within a framework that feels like it’s already old ground. Your room to move on price or structure may already be narrower than you think.

When your deposit is at risk

Some of these documents trigger payment of a deposit before a formal contract is executed. If the deal doesn’t proceed after you’ve paid, recovering that deposit may not be straightforward. Know exactly how the deposit works before you sign.

What happens after you sign

Even a clearly non-binding document can create exposure if you both act as though the deal is done. Instructing solicitors, arranging finance, engaging consultants, all of this can be relied upon by the other side if a dispute arises later.

Sometimes the risk isn’t legal. It’s commercial: you’ve given ground before you had the information to know what it was worth.

Why closing walls matter more in a warehouse transaction

Warehouse purchases have moving parts that don’t show up until you’re properly into due diligence. Signing early, before you’ve examined those parts, reduces your options at exactly the wrong time.

The lease you haven’t read yet

If the warehouse is tenanted, the lease is part of what you’re buying. Rent, outgoings, make-good obligations, option rights, and assignment conditions all affect what the asset is actually worth. If you’ve locked in a price before reading the lease, you may have committed to a number that doesn’t reflect the full picture.

GST and outgoings

How the transaction is structured affects the GST treatment, and getting that wrong has real financial consequences. Outgoings reconciliation can affect the effective yield in ways that aren’t visible from the headline figures. These aren’t details. They affect the numbers.

Building condition and environmental risk

Industrial properties carry a higher baseline risk of environmental issues than most other asset classes. Contamination, building condition, and council compliance can all affect value and financing. They take time to investigate properly, and a compressed timeline makes that harder.

Your finance timeline

Commercial finance takes longer than most buyers expect. Your lender needs time to assess the property, the lease, and your position. If you’ve agreed to an aggressive settlement timeline before your broker has tested the market, you may find yourself under pressure later, at just the wrong part of the transaction.

What belongs in the document and what doesn’t

Used well, these documents give both parties a shared starting point, keep costs tight and reduce the number of disagreements when the formal contract is drafted. The goal isn’t to avoid them. It’s to make sure they work in your favour.

Genuine commercial terms belong here: price, settlement period, deposit amount and payment trigger and the scope of due diligence you need.

The document should also be clear on which clauses bind you immediately and which don’t. Subject to finance, subject to formal contract, when the deposit is payable, critical lease changes, the scope of due diligence, and sunset dates so neither party is left waiting. These aren’t protections the other side gives you. They’re things you need to put in.

What doesn’t belong here is anything that requires careful drafting: detailed risk allocation, lease amendments, GST apportionment, indemnities. Recording these loosely creates ambiguity that’s harder to resolve than if they’d been left for the contract entirely. Anything that depends on due diligence outcomes should wait for the formal contract, where the right mechanisms can be properly drafted.

When to sign, when to pause, when to push back

Sign promptly when

The commercial terms are clear, the conditions are reasonable, and the document doesn’t create unintended exposure. Unnecessary delay can cost you a deal without any corresponding benefit.

Pause when

The settlement period seems aggressive relative to your finance timeline. The document doesn’t clearly distinguish binding from non-binding clauses. You haven’t yet reviewed the lease or understood the outgoings position. A short delay to get clarity is almost always worthwhile.

Push back when

The deposit is being triggered earlier than you’d expect. Finance is unreasonably short. GST and leases haven’t been resolved cleanly. The due diligence scope isn’t clearly defined. These are legitimate commercial points, not obstacles. A vendor serious about completing will engage with them.

The chain that stops a baby elephant stops an adult. Because the elephant stops trying. Flexibility shrinks when terms have already been discussed. The earlier you get clarity, the more room you have to use it.

How we help

When you bring us one of these documents, our first job is to understand what it actually does, not what the seller’s agent says it does. We look at which clauses bind you immediately, whether the commercial terms could be treated as final, and whether the timeline is realistic given your finance position.

We talk how competitive your offer is, and what that means for the terms you can push on. We flag what needs to be addressed before you sign, and what needs to be renegotiated before the formal contract is drafted.

We also help you understand what the document should look like for your transaction, so you’re not simply reacting to something the other side prepared.

Before you sign

This document is not just a summary of where conversations have landed. It sets the limits of what follows. Know what you’re signing before you do. Most of the risk in buying a warehouse is front-loaded. Book a time and we’ll talk through where you’re at.