A uniform Landlord Disclosure Statement on its way
Landlords of retail premises in Victoria will be required to provide tenants with a new form of disclosure statement from 1 September 2010. It is envisaged that the new harmonized disclosure statement will reduce the regulatory burden on businesses, particularly landlords operating across state borders.
The proposed new landlord disclosure statement is the result of national work undertaken in 2008 by a working group under direction of the Small Business Ministerial Council to consider proposals for harmonization of retail tenancy disclosure statements for landlords in Victoria, New South Wales and Queensland.
The new landlord disclosure statement brings together the best disclosure requirements from around Australia to help better inform tenants of their rights and obligations under the tenancy agreement and make informed business decisions about their lease.
A few things to look out for in the new statement are:
- Clause 24.2 allows the landlord to tick a box to mark whether or not ‘the tenant is assured that the current tenant mix will not be altered by the introduction of a competitor’. The definition of ‘current tenant mix’ and ‘introduction of a competitor’ are not clear. This could cause difficulties if the landlord or its agent inadvertently checks the ‘yes’ box, particularly if the tenant reads and relies on that tick prior to signing the lease.
- Clause 23.1 requires the landlord to disclose particulars of the ‘major/anchor tenants’. There is no definition in the statement of a major or anchor tenant.
- Clause 27.1 requires the landlord to disclose ‘current legal proceedings in relation to the lawful use of the premises or building/centre’. The definition of ‘lawful use’ is not clear. Until there is further guidance from the Tribunal, it would be prudent to disclose as much as possible.
- Clause 28.1 requires the landlord to disclose ‘any other representations by the landlord or the landlord’s agent’.
- The disclosure statement has spaces for certain outgoings or expenses that may not currently be recoverable under the Retail Leases Act 2003 (eg clause 14.10 has a space for land tax, 14.11 has a space for repairs and maintenance, 16.1 has a space for legal costs). There are various warnings throughout the document suggesting that retail leasing legislation in some states may prohibit recovery of some amounts. However, the inclusion of spaces for those items could invite their completion by uninformed landlords or their agents.
At this stage, it appears that new regulations will be passed to bring the new disclosure statement into operation from 1 September 2010. We will keep you updated.
For further information on the proposed new landlord disclosure statements, please contact one of our experienced Commercial Property lawyers.
Author: Evelyn Marcou