As outlined in the Retail Leases Act 1994 (NSW), landlords (lessors) and tenants (lessees) must sign disclosure statements that are in, or to the effect of, Schedule 2 of the Act. These disclosure statements provide an opportunity to note any promises or representations made to influence their decision to enter into a lease and can be referred to as needed.
The lessor’s disclosure statement is given by the lessor (landlord) to the lessee (tenant). It contains important information about the shop, the lease and the tenant’s financial obligations.
You should consider it as part of the legally binding agreement between the parties.
The statement must be in writing and the landlord must give it to you at least seven days before the retail lease begins.
The statement should be in the form of schedule 2 of the Retail Leases Act 1994 or very similar to this form.
Carefully read the lessor’s disclosure statement. Check that it includes all the agreements reached during negotiations and any promises made to you.
Tell the landlord immediately if you don’t understand or don’t agree with the statement. If you need to, ask the landlord for a new, corrected disclosure statement.
It’s important that you get independent legal and financial advice before signing the lease so that you understand all of your responsibilities and costs.
The lessor’s disclosure statement includes important details such as:
- term of the lease and option to renew
- rent and rent review method
- works, fit-out and refurbishment
- outgoings and other costs
- trading hours.
The statement should include information about the possibility of any major disruptions such as major alterations or renovations to the building or shopping centre, demolition works or nearby road works.
If the shop is in a shopping centre, the statement includes details about the centre, such as annual turnover, anchor tenants, floor plan and tenancy mix.
The NSW Small Business Commissioner can advise you on retail lease issues. Contact us.
Within seven days of receiving the lessee's (tenant's) disclosure statement, the tenant must give the landlord a lessee's (tenant's) disclosure statement or ask for an extension of time to provide this document.
Make sure you note in your disclosure statement all the commitments made by the landlord or the landlord’s agent.
If you don’t make a note of important promises, it is much harder to hold the landlord to those promises in the future. Be sure to write in the statement anything the landlord (or agent) has said in the lease.
Issues with the disclosure statement
A tenant may terminate their lease if there are specific issues with the lessor’s disclosure statement.
If the landlord doesn’t provide the statement within seven days or if it is incomplete or includes information that is false or misleading, the tenant may terminate the lease up to six months after the lease was entered into.
If the tenant terminates the lease, they may be able to recover some costs.
The tenant can’t terminate the lease this way if the landlord has acted honestly and reasonably, or if the tenant is no worse off.