What are the Key Terms in a Disclosure Statement?

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June 15, 2017

Landlords are required to provide retail tenants with a disclosure statement.

A disclosure statement presents an overview of the key commercial terms of the lease and discloses the possible operating expenses which a tenant pays in addition to rent. For instance, a tenant’s make good obligations at the end of the lease. Retail leasing legislation regulates the terms a statement must include, and so they vary from state to state.

We break down what landlords should include in a disclosure statement in each state and territory.

 

New South Wales

Legislation Key Disclosure Items
Retail Leases Act 1994 (NSW)
  • The annual base rent under the lease.
  • Whether there is turnover rent in addition to the base rent (this is usually a percentage of the annual profit the tenant makes).
  • Total estimated outgoings, promotion and marketing costs for the tenant during the first year of the lease.
  • The term of the lease.
  • The expected commencement date of the lease.
  • The estimated handover date of the premises.
  • Whether the tenant has an option to renew the lease when it ends.
  • Whether the lease gives the tenant an exclusive right to use the property in a permitted manner.

Victoria

Legislation Key Disclosure Items
The Retail Leases Act 2003
  • Annual base rent under the lease.
  • Whether there is turnover rent in addition to the base rent (this is usually a percentage of the annual profit the tenant makes).
  • Estimated outgoings and promotion and marketing costs for the tenant in the first year of the lease.
  • Term of the lease in years and months.
  • Estimated commencement date of the lease.
  • Estimated handover date of the property.
  • Any option to renew the lease.
  • Whether the lease gives the tenant an exclusive right to use the property in a permitted manner.

Queensland

State Key Disclosure Items
Retail Shop Leases Act 1994 (QLD)
  • Annual base rent under the lease.
  • Whether there is turnover rent in addition to the base rent (this is usually a percentage of the annual profit the tenant makes).
  • Estimated outgoings and promotion and marketing costs for the tenant in the first year of the lease.
  • The lease term in years and months.
  • Estimated commencement date of the lease.
  • Estimated handover date of the property.
  • Any option to renew the lease.
  • Whether the lease gives the tenant an exclusive right to use the property in a permitted manner.

Tasmania

State Key Disclosure Items
Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998
  • How the landlord calculates rent and the base amount.
  • What items are included when calculating turnover.
  • What date the tenant must begin paying rent.
  • How often the landlord will review the rent and the method.
  • The term of the lease and any options for renewal.
  • Any rental premium the landlord charges.
  • A list of general outgoings, their costs as well as the basis for their costs.
  • A list of any other costs and an estimate of their amounts.
  • The identity of the property owner, the name and address of the agent and an emergency contact point.
  • A description of the premises, including the total area for rent and what it includes.
  • What trading hours the lease permits.
  • Access to the premises.
  • The permitted use of the premises or the required use of the premises.
  • The date from which the tenant can occupy the property.
  • The tenancy mix in a shopping centre complex.

Western Australia

State Key Disclosure Items
Commercial Tenancy (Retail Shops) Agreements Act 1985
  • The annual base rent under the lease.
  • Whether there is turnover rent in addition to the base rent (this is usually a percentage of the annual profit the tenant makes).
  • Estimated outgoings and promotion and marketing costs as well as tenant’s contribution to sinking fund in the first year of the lease.
  • The term of the lease in years and months.
  • The commencement date of the lease.
  • The handover date.
  • Any options for renewal and how the tenant can exercise the option.
  • Whether the lease gives the tenant an exclusive right to use the property in a permitted manner.

Australian Capital Territory

State Key Disclosure Items
Leases (Commercial and Retail) Act 2001
  • The landlord’s accounting period (if this period is not a standard financial year).
  • An estimate of outgoings the tenant must contribute under the lease in an itemised form for the first accounting period under the lease.

Northern Territory

State Key Disclosure Items
Business Tenancies (Fair Dealings) Act 2003
  • The identification and location of the shop.
  • The approximate area of the property.
  • The proposed lease term and any option periods.
  • The rent payable and the method of calculating the rent.
  • The timing of rent reviews and how the landlord will conduct the review.
  • The tenant’s share of outgoing expenses.
  • The permitted uses of the premises.
  • The details of any work to be carried out on the site.
  • The date when the tenant can occupy the premises.

 

Key Takeaways
A disclosure statement provides a ‘snapshot’ of the lease so the tenant can decide whether they want to proceed with the transaction. Landlords should ensure they provide tenants with a disclosure statement setting out key terms of the proposed lease. If you have any questions or need assistance drafting your lease agreement and disclosure statement, get in touch with our specialist commercial leasing team on 1300 544 755.

Vee Naidoo

About Vee Naidoo

(Read all articles by Vee)
Vee Naidoo is a final year law student at the Australian National University. She is interested in intellectual property), commercial leasing and competition law, particularly as it intersects with the Arts. Vee draws on her experience as an editor, author, journalist and salesperson to provide clients with practical and accessible advice.
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