A landlord is required by the Retail Leases Act 1994 (NSW) to give a tenant a Lessor’s Disclosure Statement at least 7 days before a retail lease is entered into. It contains important information about the premises, the lease and the tenant’s financial obligations under the lease.
Neither party should enter into the lease unless the information in the Disclosure Statement is correct. Details will include:
* the term of the lease and any option to renew
* the rent and the method of rent review such as % increase or CPI adjustment
* outgoings such as Council rates, Sydney Water charges and other costs
* permitted use of the premises
* trading hours
All relevant details should be checked carefully and compared to whatever is in the lease.
If the tenant is not given a Disclosure Statement or the one provided is incomplete or contains materially false or misleading information, the tenant can terminate the lease within 6 months of entering into it. In such a case the tenant can even recover compensation. However, the tenant will not have the right to terminate in certain circumstances under the Act.
It should be noted that failure by a landlord to give a tenant a Disclosure Statement can incur a penalty of up to 50 penalty units or currently $5500.00
As you can see, whether you are are to be a landlord or a tenant of a retail lease, great care should be taken to ensure that a proper and complete Disclosure Statement is given, that it truly reflects the transaction to be entered into and that the terms of it are fully understood.
March 2023