New Disclosure Statement for Retail Leases (20 December 2010)
by Meileng Tam
National Disclosure Statement for Retail Leases
With effect from 1 January 2011, the disclosure statements for Victoria, New South Wales and Queensland will be harmonised such that landlords who own retail properties in multiple jurisdictions will benefit from a reduced regulatory burden and tenants will benefit from increased disclosure by landlords.
Major Changes
In Victoria, there are some significant changes to be noted:
- The tenant is clearly informed that they have remedies, including termination of the lease, if the information provided in the new disclosure statement is misleading, false or materially incomplete.
- The tenant’s acknowledgements in the new disclosure statement set out a number of matters that the tenant should consider before entering into the lease such as whether the tenant’s use is permitted by planning authority, whether the security of the tenant’s occupation is affected by mortgages charges or encumbrances granted by the Landlord and whether all the existing structures, fixtures and plants are in good working order.
- The new disclosure statement requires the landlord to disclose whether the premises is under a head lease or crown lease.
- The landlord must disclose current legal proceedings in relation to the use of the premises.
- All monetary obligations – rent, outgoings, advertising, promotions and other costs – must be disclosed.
- The landlord must provide details of anticipated works including disclosure of works it knows about (third party works).
- For retail shopping centres, the landlord must list all major/anchor tenants, attach floor plan showing tenancy mix, common areas and kiosks as well as disclose whether it adheres to the Casual Mall Licensing Code of Practice.
Failure to Disclose
Landlords must provide the tenant with a draft lease and a disclosure statement at least 7 days before entry into a retail shop lease. Where a tenant has exercised its option to renew, the landlord is required to provide a Disclosure Statement to the tenant at least 21 days before the end of the current term and in the case of a renewal of lease agreed by all parties, at least 14 days after entering into the agreement to renew.
Failure to do so, or where the disclosure statement is defective, the tenant may be able to terminate the lease within 6 months of entering into it, and claim damages.
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