What is a Retail Lease Disclosure Statement?
In short, a Retail Lease Disclosure Statement is a document setting out key information about important terms of the retail lease. It is a requirement of the Retail Leases Act that if a lease is a lease for retail premises then a Retail Lease Disclosure Statement is must be given by a landlord to a tenant.
The Disclosure Statement is designed to help a tenant understand the lease they are about to sign.
What Does a Retail Lease Disclosure Statement cover?
A Disclosure Statement covers many key lease matters, but some important ones are:
- How long the lease is.
- Whether the tenant has an option for a further term?
- The rent to be charged.
- How often rent is reviewed.
- What the outgoings are.
As well as other issues.
Our lawyers can advise you on retail lease disclosure statements and related matters.
When must a Disclosure Statement be given to a tenant?
The Disclosure Statement together with a copy of the proposed retail lease must be given to the tenant by the landlord not less that 14 days before the lease is signed.
Does a Disclosure Statement need to be given on the exercise of an option for a further term?
Where an option has been exercised by a tenant for a further lease term the landlord must give the tenant an updated Disclosure Statement at least 3 months before the last date the tenant has to exercise an option before the lease expires. The updated Disclosure Statement must specify any changes to the original Disclosure Statement given to the tenant. For example, the new rent, number of options for a further term or changes in rates and taxes.
Different types of Retail Lease Disclosure Statements
The Retail Leases Regulations set out the different types of Disclosure Statement. There are 4 types.
- Non-shopping Centre retail premises. As the name implies this is the form of this Disclosure Statement where a lease is for premises not located in a shopping center. The form of this Disclosure Statement is set out in Schedule 1 of the Retail Leases Act http://www5.austlii.edu.au/au/legis/vic/consol_reg/rlr2013244/sch1.html
- Shopping center retail premises. This statement contains more information for the tenant. There are often very complex rules and regulations as well as turnover rent payable by a tenants at retail shopping centers. The form of this Disclosure Statement is set out in Schedule 2 of the Retail Leases Act http://www5.austlii.edu.au/au/legis/vic/consol_reg/rlr2013244/sch2.html
- As mentioned above where there is a renewal of lease or exercise of an option for a further term then there is a specific type of Disclosure Statement for this situation. The form of this Disclosure Statement is set out in Schedule 3 of the Retail Leases Act http://www5.austlii.edu.au/au/legis/vic/consol_reg/rlr2013244/sch3.html
- The fourth type of Disclosure Statement is specific to situations where a tenant is assigning their interest under a lease to a new tenant. The form of this Disclosure Statement is set out in Schedule 4 of the Retail Leases Act http://www5.austlii.edu.au/au/legis/vic/consol_reg/rlr2013244/sch4.html
How long before a lease is signed must a Disclosure Statement be given?
In the case of a new lease a Disclosure Statement must be given 14 days before the lease is signed
In the case of a tenant exercising an option for a further term a Disclosure Statement must be given 3 months before the last date the tenant has to exercise an option before the lease expires. Generally this is 6 months before the new lease would commence.
What if a Disclosure statement is inaccurate or not given when it should have been given?
There are several potential issues that can arise out of a Disclosure Statement being inaccurate or not given at all.
If not given the tenant may give the landlord notice that the Disclosure Statement has not been received Statement. If the notice procedure has been properly followed the tenant may withhold rent and may be able to terminate the lease within 7 days of being given the requested Disclosure Statement.