Purpose of an agreement for lease (Procedural steps for the grant of a lease or underlease)-FS

Question 1

What is an agreement for lease?

Answer 1

A contract to grant a lease at a future date. It is not a lease itself, but a binding agreement to enter into one.

Question 2

What legal transaction does an agreement for lease resemble?

Answer 2

A contract for sale of freehold land — both involve exchange of contracts and a future completion date.

Question 3

What is the main purpose of an agreement for lease?

Answer 3

To create commercial certainty for both parties before the lease is formally drawn up and completed.

Question 4

Does an agreement for lease create a proprietary interest in the land?

Answer 4

Not immediately — it creates a contractual right, not a legal estate, until the lease is executed.

Question 5

Why might parties prefer to use an agreement for lease rather than grant the lease immediately?

Answer 5

To allow time for conditions precedent (e.g. construction, consents, fit-out works) to be fulfilled before lease commencement.

Question 6

What happens if either party fails to complete the lease after exchanging an agreement for lease?

Answer 6

The non-defaulting party may seek specific performance or damages for breach of contract.