Lessor’s Disclosure Statements have formed an integral part of Retail Lease documentation for over 10 years now.
The Lessor’s Disclosure Statement is a brief summary of the retail lease commercial terms and specific conditions. Included in varying forms (due to different forms applicable for each State & Territory) and an appendix of additional information relating to the Shopping Centre (premises).
An example of the details of the Shopping Centre (premises) include the following:
- Alterations works (Renovations, Redevelopment, Demolition) proposed
- Expiry dates of major/anchor Tenants
- Detailed Schedule of Outgoings
- Number of Shops
- Tenancy Mix
- Centre Turnover/Traffic
- Casual Mall Leasing of Common Area
Depending on which state you are in these may vary – please refer your relevant Retail Lease Legislation-Forms.
The importance of the Lessor’s Disclosure Statement cannot be taken lightly and requires serious review.
When you receive the Statement, the parties have normally completed their exchange of commercial terms and conditions subsequent to the lease negotiations.
Regardless if the Statement is issued for a new lease, a lease renewal/option or an assignment, it must be thoroughly cross-checked against the following:
- Meeting notes
- Verbal statements relied upon
- Offers to Lease
- Draft Lease document package
Importantly assessing notes and verbal statements for Representations by the Lessor, their manager or Agent that you have relied upon (or made assumptions as a consequence) as part of the process of negotiation and proceeding to enter into a lease.
This is vital as you will be required to sign-off that the Lessor Disclosure is accurate and that it includes Representations by Lessor.
If there remain items that do not exactly reflect all the points across the information listed above, then you have the opportunity to raise, clarify and resolve to satisfy yourself prior to formally executing the lease.
Which brings us to the most overlooked document/form related to Retail Leases- the Lessee Disclosure Statement.
Therefore next week’s instalment is titled “Lessee’s Disclosure – Speak-Up Now or Forever Hold Your Lease!”