A new disclosure statement under the Retail Leases Regulations 2003 (Vic) came into operation on 1 January 2011.
When a draft of the disclosure statement was first circulated, I made the following comments in a practice note:
Attached is a link to a letter sent from Roger Arwas at DIIRD to the Shopping Centre Council of Australia last month which is now available on the SCCA’s website here: http://www.scca.org.au/Pdf%20links/2010PDFlinks/Final%20National%20Disclosure%20Statement%20May%2010.pdf
It appears that landlords of retail premises in Victoria will be required to provide tenants with a new form of disclosure statement from 1 September 2010 [Ed - this was subsequently extended]. Many practitioners in this area do not appear to be aware of the new disclosure statement yet.
Landlords should be advised of the new disclosure statement with time to ensure compliance by 1 September 2010.
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 ‘[t]he 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 and landlords and their agents should be careful to avoid inadvertently marking the affirmative box. 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 ‘[c]urrent legal proceeding[s] in relation to the lawful use of the premises or building/centre’. The definition of ’lawful use’ is not clear. For example, it may cover a dispute over whether the tenant has breached the permitted use in its lease. It may also cover a breach of health regulations or the Occupational Health and Safety Act by the tenant that has resulted in a notice served on or charges laid against a tenant in the centre, but not the landlord. Until we have some further guidance from the Tribunal, it would be prudent to disclose as much as possible.
- Clause 28.1 requires the landlord to disclose ’[a]ny 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 RLA 2003 (eg. claue 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.
- The new disclosure statement does not sit comfortably with s 61(5A) of the RLA 2003. That section requires an outgoing tenant who has sold its business to provide to the incoming tenant and purchaser a disclosure statement ’in the form prescribed by the regulations (but the layout of the statement need not be the same as the prescribed disclosure statement).’ Under s 62, the assignor/vendor and its guarantors are not liable for breaches of the lease after the assignment has taken effect, provided that the assignor/vendor has provided a disclosure statement under s 61(5A) (erroneous reference to s 61(4) notwithstanding) and the disclosure statement is not false or misleading or materially incomplete. The ambiguity set out above may mean the disclosure statement is arguably false, misleading or materially incomplete, preventing the assignor/guarantor from obtaining the benefit of s 62. Also, an assignor/vendor would not have any knowledge of some of the information required in the new disclosure statement. That means that an assignor / vendor must rely on information provided to it, presumably by the landlord or centre management under s 61(5), in order to obtain the protection of s 62.
Now that the new statement has been in force for over three months, has anyone had any experiences with the new form?
I have been asked to give a CPD on the new disclosure statement later in the year, so any comments will be most helpful.