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Owners and tenants: Time is running out

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Mandatory disclosure is now nearly upon us with the Federal Government passing the Building Energy Efficiency Disclosure Act on 28 June 2010 (Act).   Building owners will need to be prepared to ensure their buildings meet the Commercial Building Disclosure requirements.

The new program is called Commercial Building Disclosure.  Building owners will need to disclose the energy efficiency of large commercial office when they sell, lease or sub-lease office space greater than 2000m2.

Who has to disclose and when?

The Act only applies to corporations and to the Crown. However, non-corporate entities may participate voluntarily.  From 1 November 2010 to 31 October 2011 building owners will have to:

  • Provide in all advertisements for the sale, lease or sublease of applicable buildings a valid certified NABERS (National Australian Built Environment System) energy rating for the Base Building or Whole of the Building
  • Register the certified NABERS energy rating on the Building Energy Efficiency Register website

From 1 November  2011 building owners will have to:

  • On all advertisements for the sale, lease or sublease of applicable buildings display a valid NABERS energy rating
  • Disclose to prospective purchasers, tenants or sub-tenants a valid and certified Building Energy Efficiency Certificate (BEEC) which will include:
    • an energy efficiency rating for the building based on the NABERS Energy base building rating
    • an assessment of the energy efficiency of the lighting
    • general energy efficiency guidelines
  • Register the BEEC on the Building Energy Efficiency Register website

What “transactions” will these obligations apply to?

Transactions include the sale (or lease or sub-lease), making an offer to sell (or lease or sub-lease), and inviting offers to purchase (or take a lease or sublease) of net lettable office area greater than 2000m2.  It also includes options and agreements for lease.

A BEEC can only be issued by an accredited assessor and will be current for 12 months from the date of issue.

What is a BEEC?

BEEC is a certificate that contains:

  • an energy efficiency rating for the building based on the NABERS Energy base building rating
  • an assessment of the energy efficiency of the lighting that is expected to remain in the space being sold, leased or sub-leased
  • guidance on how to improve building energy efficiency

NABERS is a performance based rating system derived from actual occupation and operations in a commercial building over a 12 month period.

A base building rating only applies to the energy consumed in the central services (for example lifts and air conditioning) and common areas (for example carparks and foyers) of the building – not services used exclusively within a tenancy space.  This means that a separate metering of the base building (as opposed to the tenancy space) would be required to measure energy consumption in the base building.  If base building data is not available due to inadequate metering, a whole building rating must be disclosed.

Direct exemptions

There are some exceptions and exemptions to the above:

  • Properties less than 2 years old from the date of the Certificate of Occupancy
  • Strata Title Offices
  • Transfer of titles through sale of shares or units of interest
  • Short term leases for a period less than 12 months
  • Lease options that were part of the original lease

Claimable exemptions

On receipt of an application, the Secretary of the Commonwealth Department of Climate Change and Energy Efficiency may grant an exemption where:

  • it is not possible, due to the characteristics of the building or the area of the building, to assign a rating or assess the lighting under the methods and standards for assessment; or
  • an office is used for security or police operations

Penalties

A failure to comply with the Act could result in civil penalty orders of up to $110,000 for each day a non-complying advertisements appears or a property is offered for sale or lease without proper disclosure, infringement notices and criminal offences and publicity.

As the Act includes significant enforcement and penalty provisions, it is imperative that all parties affected by the application of the Act comply with its requirements.

If you require any assistance on Commercial Building Disclosure contact one of our Commercial Property lawyers.

Author:  Evelyn Marcou

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