Background
Leases of retail premises in Victoria are governed by the Retail Leases Act 2003 (Vic) (Act) and the regulations. The former regulations were replaced by the new Retail Leases Regulations 2013 (Regulations), which took effect in 2013.
Introduction of four Disclosure Statements
The most significant effect of the new Regulations was to replace the multi-purpose Disclosure Statement with four separate Disclosure Statements. These statements are to be used in the following scenarios in connection with Victorian retail leases:
- Retail premises not located in retail shopping centres;
- Retail premises located in retail shopping centres;
- Renewal of a lease; and
- Assignments of a lease with an ongoing business.
Consequences of failing to give disclosure
There are serious consequences where a Disclosure Statement is not provided by a landlord, or if false, misleading or incomplete.
If the landlord fails upon entering into a new lease to provide a Disclosure Statement within the required time, and in the form prescribed by the Regulations, the tenant may, between 7 days and 90 days after entering into the lease, give the landlord written notice that they have not been provided with the prescribed Disclosure Statement.
In the case of renewal of a lease, if the landlord fails to provide a Disclosure Statement within the time, and in the form prescribed by the Regulations, the tenant may, at any time up to 90 days after the date by which the landlord was required to provide the Disclosure Statement, give the landlord written notice that they have not been provided with the prescribed Disclosure Statement.
If a tenant gives the landlord one of the notices referred to above, then the tenant:
- May withhold the payment of rent until the day on which the landlord provides the Disclosure Statement;
- Is not required or liable to pay rent for the period commencing on the day the notice was given by the tenant until the landlord gives the tenant the Disclosure Statement; and
- May terminate the lease at any time within 7 days from when the landlord gives the tenant the Disclosure Statement.
In the case of an assignment of lease, where a landlord fails to provide a tenant with a Disclosure Statement within 14 days of such a request being made by a tenant, the landlord may be subject to financial penalty.
Timing for giving Disclosure
The Act imposes different disclosure obligations on the landlord and strict timing requirements for giving disclosure depending on the circumstances which the landlord must be mindful of.
New items of disclosure
There are some key differences in the new forms of disclosure provided in the Regulations.
All forms of disclosure required to be given by the landlord now require disclosure concerning any alteration or demolition works, planned or known to the premises or building/centre in which the premises are located (including surrounding roads and to the land adjacent to or in close proximity to the premises or building/centre in which the premises are located) during the term or any further term or terms.
In addition, the statement for the assignment of a lease also requires a tenant to disclose any matter not connected to the lease agreement, planned or known to the tenant, which may materially affect the viability of the ongoing business over the remaining lease period. The outgoing tenant must also disclose whether the landlord has issued any notices to the tenant pursuant to the Act and any material variations to the Lease.
The Disclosure Statement for a renewal of a retail lease is quite different from the former multi-purpose Disclosure Statement. The renewal disclosure only requires the landlord to disclose any costs arising under the new lease, and any alteration or demolition works or other matters that may affect the tenant’s business (as noted above).
Form of Disclosure
A Disclosure Statement is required to be given in the form provided under the Regulations. The layout however, such as the appearance and font, may be altered. It is important to ensure when altering a statement that none of the wording of the prescribed form is removed or varied, even where a section may not be applicable.
It is important that both landlords and tenants are aware of the above changes to ensure that their disclosure is made in the correct form and at the appropriate time.
Pointon Partners have an experienced team that can assist Landlords, Tenants, Property Managers and Real Estate Agents with all leasing arrangements, including provision of the appropriate lease and disclosure documents.
We advise on commercial, industrial, and retail leases and can assist with the negotiation, preparation, variation surrender and assignment of leases, sub-leases, licence agreements, agreements to lease, shopping centre leases and mortgages of lease.
We are well versed in helping our clients understand their rights and obligations under leasing agreements and our practitioners regularly appear at VCAT and mediations by the Small Business Commissioner on leasing dispute matters.
If you have any queries about disclosures, please contact Ted Vlahos at Pointon Partners on 03 9614 7707.
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