FAQ: How are Disclosure Statements affected by Retail Amendment Act 2020?

The Retail Amendment Act 2020 is now in effect and has been put in place to clarify the obligations of landlords and tenants under retail leases per the Retail Leases Act 2003. We previously covered the changes made to the Building Act 1993 regarding Essential Safety Measures (click here to see post).

One of the amendments included in the Retail Amendment Act 2020 means that landlords now must provide information to retail tenants in a more timely manner. “Information” refers to what would be included in a disclosure statement, plus a copy of the proposed lease in writing; and “a more timely manner” has been clarified to mean ‘at least 14 days before entering into a retail premises lease’.

For the purposes of disclosure, the Amending Act also states that the proposed lease must specify the details of the rent, the term and the tenant’s details. If a proposed lease is given to a tenant and contains any changes to a previous proposed lease, the tenant must be notified of the changes.

Prior to the amendment, landlords were able to wait until seven days prior to the commencement of the lease to provide a tenant with a disclosure statement and copy of the proposed lease, and with little-to-no consequence for non-compliance. Landlords now risk substantial fines if they fail to notify the tenant of the changes (currently up to $8,261 for individuals and up to $41,305 for corporations).

It is worth noting that the language used in the legislation is a little vague, but the general understanding is that the 14-day period commences from the date that the final copy of the proposed lease is given to the tenant (even if the changes have come from negotiations and requests by the tenant). 

So what does this mean for me?

The 14-day commencement delay may heavily impact the ability to move quickly in the market. It is not uncommon for tenants to require leases to commence shortly after an agreement has been made with the landlord, so difficulties may arise due to the required 14-day delay of the commencement date following the disclosure. Because of this, we suspect that many landlords will choose not to engage in negotiations on terms of lease, which may place pressure on tenants to accept leases ‘as is’ in order to meet their desired commencement date.

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