03 March 2011
Article by Corinne Attard, HBL Ebsworth
On 1 January 2011, New South Wales, Queensland and Victoria jointly adopted a new national harmonised landlord disclosure statement. This move was the result of a Federal Government initiative to enhance consistency of the retail tenancy regulatory framework and harmonise retail shop disclosure requirements.
The new disclosure statement is also designed to help tenants make more informed decisions, by requiring landlords to provide more information about the tenant’s rights and obligations under the prospective retail shop lease.
The new form must also be used by franchisors who hold the head lease and are proposing to sublease or licence the premises to their franchisee. In most states a “licence to occupy” falls within the definition of a retail lease.
To standardise the retail leasing legislation in each State, amendments have been made to the Retail Leases Act 1994 (NSW), the Retail Shop Leases Regulation 2006 (Qld) and the Retail Leases Regulations 2003 (Vic). The new forms are practically identical except for minor legislative differences between the States and minor variations in the guidance commentary.
No changes have been made to the forms of disclosure statements to be provided by lessees, assignees and assignors.
For retail leases (as defined) that are entered into or renewed on or after 1 January 2011, the new form of disclosure statement must be provided to tenants (including franchisees).
If a landlord (or franchisor) does not use the correct form of disclosure statement, the statement is arguably incomplete and may even be misleading and deceptive as it does not contain the prescribed disclosure. In New South Wales and Queensland, the tenant is then entitled to terminate the lease by giving written notice to the landlord within 6 months after the lease is entered into. In Victoria, the tenant may give the landlord a written notice of termination within 28 days after the latter of receiving the disclosure statement, receiving the proposed lease and entering into the lease.
Tenants however must be cautious not to terminate the lease on the ground that the disclosure statement is defective if the landlord acted honestly and reasonably and ought reasonably to be excused and the tenant is in fact in substantially as good a position as it would have been if the failure had not occurred.
The amendments made to the previous New South Wales and Victorian forms are not substantial as the previous disclosure statements for those two States were already comprehensive. However substantial amendments were made to the Queensland disclosure statement.
Generally, landlords are now required to disclose the following additional information:
List of structures, fixtures, plant and equipment in the premises, to be provided by the landlord * Plan of premises (if available) * Copy of head lease or Crown lease (if applicable)
- Works, fit out and refurbishment
Details of any requirements the tenant must comply with relating to the quality or standard of the shopfront or fitout * Whether the landlord will be contributing to the cost of the tenant’s fitout
- Rent, outgoings, other costs
Whether there are any rent free and outgoing free periods * Additional information on outgoings payable such as body corporate levies, building intelligence services, caretaking and fire levies * Details of any costs arising under the lease that are not referred to elsewhere in the disclosure statement, such as interest and legal costs
- Alteration works
Details of any alteration works, planned or known to landlord during the term or any further terms of the lease * Clauses in the lease dealing with relocation and demolition works
- Retail shopping centre
List of all major and anchor tenants (such as department stores, discount department stores, supermarkets) and dates on which the leases held by those tenants expire * Whether the landlord will assure the tenant that the current tenancy mix in the shopping centre will not be altered by the introduction of a competitor * Floor plan, customer traffic flow statistics (where collected) and a copy of any casual mall licensing policy
- Other disclosures
Details of any current legal proceeding in relation to the lawful use of the leased premises * Details of any other oral or written representations made by the landlord or landlord’s agent
In addition to the above disclosures, the new disclosure statement contains warnings to the tenant to consider issues such as:
- Whether the premises comply with building and safety regulations
- Whether the premises are affected by outstanding notices by any authority
- Whether the relevant planning authority allows the proposed use for the premises under planning law.
This is especially important for premises that are stand-alone sites or are not in existing retail shopping centres.
The new disclosure statements can be accessed on following websites:
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.