Understanding Landlord Disclosure Statements

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Table of Contents

• When Is a Disclosure Statement Required?
• Check Your Commercial Details
• Other Important Disclosures
• Landlord and Tenant Representations
• What Are Your Rights if There Is a Misrepresentation or Missing Disclosure Statement?
• Key Takeaways

Under the relevant retail tenancy legislation in all states and territories in Australia, a Landlord should provide the Tenant with a disclosure statement before entering into a retail Lease. A disclosure statement is a statement the Landlord has to provide whereby they disclose certain information about the retail premises and the centre (if applicable).

Each state legislation will determine what must be disclosed by the Landlord and the time frame for providing a disclosure statement. Understanding these disclosure requirements and the key things to look out for in a disclosure statement, such as commercial details, key disclosures and representations, is essential for ensuring you, as a tenant, understand the contents of the proposed Lease you intend to enter into. In this article, we will set out when a disclosure statement is required and what essential items to look out for in your disclosure statement. 

When Is a Disclosure Statement Required?

The requirements around disclosure statements are different from state to state. In most states, the Landlord is required to provide a disclosure statement at least seven days before the Lease starts. However, this varies in SA and ACT. Most states will consider a retail Lease to start when you either take possession of the Premises or pay rent as the tenant. 

Check Your Commercial Details

Once you receive the disclosure statement, one of the first and most important things to do is check all the commercial details are correct and in line with your understanding of the deal. This could include, but is not limited to: 

• landlord & Tenant names; 
• rent; 
• rent review method; 
• outgoings; 
• term and Commencement Date; and/or
• permitted use. 

If any of your commercial details are wrong or inconsistent with the lease, raising them as soon as possible is essential to ensure there isn’t any confusion. 

Other Important Disclosures

In addition to the vital commercial details, the disclosure statement will also include several other disclosures relating to the Premises, including information on the calculation of outgoings, details of the premises and/or permitted use and, in the case of shopping centres, information about the tenancy mix and customer flow. You can read more on the state-specific requirements in our article here. 

Prominent disclosures to look out for are: 

• List of Outgoings – this should give you an estimate of the outgoings you will need to pay on an ongoing basis; 
• Demolition – understanding the situations where the Landlord may demolish the Premises/Centre is necessary as it materially affects your rights under the lease; 
• Relocation – you should consider how the relocation provisions may affect you and whether you can comply with these provisions; 
• Refurbishment – you should ensure you can comply with any refurbishment requirements; and
• Potential Construction Works – these may impact your business due to disruptions to traffic flow, debris, noise and other disruptions. 

Ensuring you can comply with any disclosures made in the disclosure statement is detrimental. You will need to ensure you are aware of these key considerations before deciding whether entering into the lease is a commercially viable option for you.

Landlord and Tenant Representations

In addition to disclosures, the Disclosure Statement is also an opportunity for both the landlord and tenant to put down in writing certain representations they wish to make that the other party can rely on. It is common for the Landlord to make representations such as:

1. any planned refurbishment or demolition of the Premises/Centre;
2. any outgoings and other monies that may be payable (such as legal fees, insurance bank guarantee); and
3. details regarding the centre as a whole, including turnover, foot traffic and major/anchor tenants.

It is essential to note any representations the landlord makes, particularly if you are relying on them. 

In addition, as a tenant, if you are relying on specific promises or representations that the landlord has previously made, then you can set these out in writing in the disclosure statement to make it clear that you are relying on what the landlord has previously told you. 

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For example, has the Landlord represented that you will have exclusivity as to your permitted use? Or have they represented that there will be several large anchor tenants to drive customers into the premises? If they have, you want to ensure the disclosure document records this. Doing so may give you protection if the landlord doesn’t follow through with those representations.

What Are Your Rights if There Is a Misrepresentation or Missing Disclosure Statement?

While your rights will differ from state to state depending on the retail legislation, if there is a misrepresentation or false statement in your disclosure statement, you may have a right to either:

1. a claim for reasonable compensation for damage attributable to the false or misleading statement; or
2. a chance to terminate your lease, albeit, in some states, this right only applies in the first three to six months of the lease term.

Similarly, if a disclosure statement is not provided, this will generally give rise to a right to terminate the lease, and the tenant may be eligible for compensation. 

Key Takeaways

Disclosure statements are essential and valuable documents. Once you have received your disclosure statement, you must check off the critical commercial details. This includes ensuring it contains details of how to calculate and conduct rent, outgoings and rent reviews.

Disclosure statements should identify critical issues, such as redevelopment or refurbishment plans, that are likely to impact your business, and it is essential to acknowledge and understand what this means for your business before signing the lease. It is also necessary to ensure the disclosure statement contains all meaningful landlord representations. Lastly, don’t forget that if you have not been provided a disclosure statement or the statement was false or misleading, it is likely that you will have a right to termination; however, these rights are contemporaneous and vary from state to state. 

If you need assistance reviewing your landlord disclosure statement, LegalVision’s experienced property lawyers can assist as part of our LegalVision membership.  For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents.  Call us today on 1300 544 755 or visit our membership page.