Incorrect information in a disclosure statement for Tenants

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Getting to the point in a lease negotiation where the terms have been agreed to and it appears as if the rental will move forward is always a time to want to start celebrating. But before you do, there will be a couple of small but significant details you must attend to as the landlord or the tenant. Once these last concerns are reviewed and agreed to, it will definitely be time to enjoy the beginning of your new venture.


What are the items that will be left on your “to do” list prior to a fully executed lease agreement?

  1. Clarified Obligations
  2. Disclosure Statement


Let’s begin with identifying what the steps are for the obligations of the parties to be clarified. 

  • A draft copy of the proposed lease; the content of this draft should be exactly as you expect the final lease agreement to appear with regard to all terms and overall expectations for both parties
  • A disclosure statement which should contain all of the components required by law
  • A copy of the Tenant Rights Guide


While all three of these documents are important, the most important is the draft of the proposed lease and the disclosure statement. 


The Proposed Lease

The proposed lease should be reviewed by the lessee and their legal counsel. It is imperative that the lease is read carefully to ensure that the language meets the terms agreed to but also to be sure that any standard expectations are reviewed and understood. This is the time where any questions or concerns should be raised and any language that needs to be altered or removed, be addressed. 


The Tenants’ Rights Guide

While this guide might not be your most interesting read, it is important that the lessee review its contents to understand their own rights and obligations under the applicable laws of New South Wales. In reviewing this guide, note any questions you have in the margins so that you can review your concerns with your counsel or the landlord.


The Disclosure Statement

The last step that is imperative to create a legally binding lease is the receipt and review of the Disclosure Statement. The disclosure statement is required in all commercial leases in NSW Australia. There are significant penalties for a landlord who does not provide the lessor with a disclosure statement in a timely and appropriate manner.


Content of a Disclosure Statement

A disclosure statement must contain the following information:

  • Terms of the lease
  • Options for renewal
  • Identification of the premises to be leased
  • Any shared facilities with other tenants
  • Cost description of any shared facilities
  • Changes or step-up dates in the monthly rental fees
  • Any changes that the tenant is allowed to make
  • Outfitting promised by the lessor 
  • Information specific to the type of property you are leasing i.e. shopping center space such as parking, traffic, hours of allowed operation, security provided etc.


Delivery of a Disclosure Statement

A disclosure statement must be delivered:

  • In writing
  • Seven days before the lease is entered into
  • Contain all of the legally required information

Response to Disclosure Statement: The tenant should respond to the disclosure statement in the affirmative or with questions, concerns or alterations within seven (7) days. If there are details within the disclosure statement that the lessee does not agree with it is imperative that those concerns be put in writing and delivered to the lessor immediately. In the event that an agreed upon Disclosure Statement cannot be reached, the parties may have to resort to engaging with a mediator to help with this last step.


Failure to Provide a Disclosure Statement

In New South Wales the failure to provide a lessee with a proper Disclosure Statement can result in the lessor being allowed to terminate the lease for the first six (6) months of the lease and collect damages. 

An improper Disclosure Statement can included;

  1. Failure to provide seven (7) days before the lease begins
  2. Providing the statement to the lessee late 
  3. Incorrect or omitted items
  4. False or misleading information

While the Disclosure Statement and its requirements are near the end of the process of renting retail and/or commercial space, its timing does not eliminate its importance. Therefore, before completing the process of signing any retail/commercial lease, it is very important to secure a proper and accurate statement of disclosure from the lessor.

If you find yourself in need of assistance with this, or any other legal issue, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.


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