Snapshot of the Retail Lease Disclosure Statement
In addition to signing a retail lease, the Retail Leases Act 1994 (NSW) requires the landlord provide to the tenant a Disclosure Statement before entering a retail lease (or renewing a retail lease). The Disclosure Statement must be in writing and signed by the landlord and a copy must be provided to the tenant 7 days before the lease is entered into.
The Disclosure Statement plays a crucial role in ensuring transparency and fairness in leasing arrangements as it contains essential information about the lease terms, the property, financial obligations (e.g. outgoings that the tenant is responsible and any other amounts payable by the tenant), details of any refurbishment or fit out requirements that the tenant must undertake, and disclosures in relation to exclusivity, potential works at the property or in the future.
Landlord
Failure to provide an accurate Disclosure Statement can give rise to disputes throughout the lease term. It is crucial that the Disclosure Statement is prepared with precision to avoid any ambiguity and to allow parties to understand their respective legal obligations under the lease.
Landlords should be mindful of the following matters when you or your agent are preparing the Disclosure Statement:
when and how the increase of rent and outgoings are calculated;
outgoings payable by the tenant and the breakdown of the outgoings. If this is not set out in the Disclosure Statement, the landlord cannot require the tenant to pay or contribute to outgoings. Furthermore, tenants may not need to pay for outgoings that are beyond the estimated amount documented in the Disclosure Statement;
the condition of the property and if there are an any damages to the property that the tenant should be aware of;
whether there are any proposed redevelopment or refurbishment plans; and
the maintenance and repair obligations for plumbing, air-conditioning and all other kitchen equipment etc.
If the landlord fails to provide the Disclosure Statement to the tenant (or if the Disclosure Statement is incomplete or, if it contains materially false or misleading information) the tenant may have the right to terminate the lease within the first 6 months of entering into the lease.
Tenant
When you are provided with a copy of the Disclosure Statement from the landlord, you must ensure that the Disclosure Statement cover the following matters:
description of the premises – the location and any additional details of the condition of the premises;
financial obligations – rent payable, outgoings, utilities and other costs associated with the lease;
term of the lease – including any options to renew and the total duration of the lease;
details of any refurbishment or fit-out requirements; and
any potential works required at the Property.
The tenant must complete and return a signed copy of the Disclosure Statement 7 days after receipt of the Disclosure Statement from the landlord. Failure to provide a signed copy could potentially affect the lessee’s rights under the lease.
Conclusion
Parties entering into a retail lease must ensure that the Disclosure Statement correctly reflects the parties’ understanding and obligations. This will allow parties to enter a retail lease with confidence and clarity to avoid any potential disputes during the term of the lease.
If you require assistance with your retail or commercial lease(s), please contact our people.
Ron Zucker 0410 590 111
Eollyn Cortes 0478 727 395
Sagang Chung 0431 435 333
Julia Zou 0426 670 202
Comentarios