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What is a Retail Lease Disclosure Statement?

As a tenant entering into a retail lease for a shop, you will receive various documents to review, including a landlord’s disclosure statement. But what does this document do, and why do you get it? This article will explain the purpose of a retail lease disclosure statement and what you need to consider after receiving it.

What is a Disclosure Statement?

Each state and territory in Australia regulates retail leasing differently. However, landlords in every state must provide tenants with a disclosure statement before they sign a new lease or renew an existing one. The specific contents of this disclosure statement vary across states, but it always serves as a summary guide to the key commercial terms of the lease. Its purpose is to give you a clear snapshot of your financial obligations and your position on common leasing issues, such as:

  • rent; 
  • rent review;
  • outgoings; 
  • any other costs associated with the lease;
  • tenancy mix (if in a shopping centre); and 
  • important vital provisions, such as those relating to the likelihood of relocation or demolition of the premises. 

When Should a Landlord Give You a Disclosure Statement?

In the typical retail leasing process, the landlord provides you with a formal letter of offe after negotiating the lease. This is often called a heads of agreement and outlines the agreed-upon vital commercial terms. Once you agree on the letter of offer, the landlord’s lawyer issues a disclosure statement and a draft of the lease, along with any additional documents like fit-out deeds or incentive deeds.

At this point, carefully review the lease documents and the disclosure statement to ensure all the information is correct. Each state or territory in Australia has slightly different disclosure requirements under retail leasing laws. Therefore, you must familiarise yourself with the relevant regulations for your location before entering into a lease.

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What to Look Out For in the Disclosure Statement

Financial Obligations

The disclosure statement sets out your financial obligations under the lease. Therefore, you must look out for information on the following:

  • rent you must pay for the first year;
  • rent review method to be used to increase the rent each year;
  • dates that the rent review will take place; and
  • other financial obligations that apply to the lease, such as lease outgoings or shopping centre promotion fees that you must pay.   

You must review these figures. In particular, you should pay attention to any itemised outgoing figures to give you an idea of the additional costs you must pay per month in addition to your rent. When reviewing the outgoings, if you do not understand certain costs, seek clarification before accepting and signing the disclosure statement and the lease. Querying them as soon as possible ensures you retain the right to dispute them later.

For example, suppose the landlord has listed $10,000 for landscaping costs, but there is no garden or very little garden surrounding the premises. In that case, you should query this expense and ask whether it is a legitimate outgoing.

Tenancy Obligations

In addition to the financial obligations, the disclosure statement should reflect your lease agreement. Therefore, it should set out the obligations that you have under the lease, such as:

  • whether you must redecorate the premises during the lease term and how often this is to occur (for example, must you repaint every three years or only at the end of the lease term?);
  • what you must do at the end of your lease to make good the premises;
  • any fit-out works to be carried out and whether you or the landlord will do these works;
  • what type of insurance you must take out; and
  • what form of security must you provide under the lease (will this be a bank guarantee, personal guarantee or both?).
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Do I Need to Return the Disclosure Statement to the Landlord?

After confirming that the disclosure statement accurately reflects your agreement with the landlord, sign it and return it to them. Some landlords wait for the signed disclosure statement before issuing the draft lease. However, if you prefer to review the lease and the disclosure statement simultaneously, you should request them together.

Some states have template disclosure statements.

NSWRetail lease lessor and lessee’s disclosure statement
Retail Lease Assignor’s Disclosure Statement
QLDLessor disclosure statement
Lessee disclosure statement
Assignor disclosure statement
VICNon-shopping centre retail premises
Shopping centre retail premises
Renewal of a lease
Assignment of a lease with an ongoing business
WACommercial Tenancy Disclosure Statement 
ACTLeases (Commercial and Retail) Act 2001—Form—Disclosure Statement

Key Takeaways

Landlords must provide a disclosure statement to tenants entering or renewing a retail lease, summarising key commercial terms like:

  • rent;
  • rent review methods;
  • outgoings; and 
  • tenancy mix. 

This document is given before the lease is signed, usually after a formal letter of offer. You should review it, clarify any unclear costs, and sign and return the statement. Some landlords wait for this signed statement before issuing the draft lease. However, you can request to review both documents together. Each Australian state and territory has specific disclosure requirements, often providing template statements to guide the process.

If you require assistance with your disclosure statement, our experienced leasing lawyers can help as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers who can answer your questions and draft and review your documents. Call us today at 1300 544 755 or visit our membership page.

Frequently Asked Questions

Why do I need a Disclosure Statement? 

The disclosure statement helps tenants understand their financial obligations and positions on common leasing issues before signing the lease. It includes details on rent, rent reviews, additional costs, and key provisions like the likelihood of relocation or demolition.

When should I receive the Disclosure Statement? 

Typically, landlords provide this document after negotiating the lease and issuing a formal letter of offer. This letter outlines the agreed-upon key commercial terms. The landlord’s lawyer issues the disclosure statement and draft lease together.

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Jessica Dinh

Jessica Dinh

Lawyer | View profile

Jessica Dinh is a Lawyer in LegalVision’s Property and Leasing team.

Qualifications: Bachelor of Laws, Master of Property Development and Project Management, University of Technology Sydney.

Read all articles by Jessica

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