Retail lease lessor and lessee's disclosure statement

Retail lease lessor and lessee's disclosure statement

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What is a Retail Leases Act Disclosure Statement?

As outlined in the Retail Leases Act 1994 (NSW), landlords (lessors) and tenants (lessees) must sign a disclosure statement when entering into or renewing a lease (Schedule 2 of the Act). These disclosure statements provide an opportunity to note any statements or representations made by either party to influence their decision to enter into a lease.

The lessor’s disclosure statement is given by the lessor to the lessee. It contains important information about the premises, the lease and the lessees’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 lessor must give it to the lessee at least seven days before the lease is entered into. The statement should contain all the information required under Schedule 2.
 
Neither party should enter into the lease unless the disclosure statements are correct. Further negotiation should take place if necessary to ensure that both parties are happy with the information disclosed.

Both parties should obtain independent legal and financial advice before signing the lease so that they understand all of  their responsibilities and costs.

The lessor’s disclosure statement includes important details such as:

  • the term of the lease and option to renew
  • the rent and rent review method
  • works, fit-out and refurbishment
  • outgoings and other costs
  • trading hours.

The statement should include information about any planned or known disruptions such as 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 should include 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.

Tenant’s responsibility
Within seven days of receiving the lessor's disclosure statement, the lessee must give the lessor a lessee's (tenant's) disclosure statement, or ask for an extension of time to provide this document. In this document, the lessee can make a note of any statements or representations that they are relying upon.

When do I need to sign the Disclosure Statement?

The Disclosure Statement must be signed by both parties before entering into the lease. The lessor must sign Part A at least seven days before the commencement of a new lease
or renew a lease. The lessee must sign Part B within seven days after receiving the signed Part A from the lessor.