What Is a Disclosure Statement and Why Does It Matter?

A Disclosure Statement is one of the most important documents in a retail leasing transaction.

Under the Retail Leases Act 1994 (NSW), landlords must provide a Disclosure Statement to a proposed tenant before they enter into a retail shop lease. The purpose of the document is to ensure tenants understand the key commercial and legal terms of the lease before becoming legally bound.

For landlords, tenants and managing agents, a Disclosure Statement is not simply an administrative formality. If it is inaccurate, incomplete, or provided late, there can be significant legal and financial consequences.

What Information Does It Include?

A Disclosure Statement summarises the key terms of the proposed lease and outlines the tenant’s obligations and potential risks associated with the premises.

It commonly includes details about:

• the landlord and tenant;
• the premises and permitted use;
• the lease term and any options;
• rent and rent review provisions;
• estimated outgoings payable by the tenant;
• fit-out requirements;
• incentives or rent-free periods;
• trading hours or shopping centre requirements; and
• any landlord works, relocation or redevelopment rights.

The Disclosure Statement should always be consistent with the lease itself. Any inconsistencies between the two documents can create confusion and increase the risk of disputes.

When Must It Be Provided?

In New South Wales, landlords are generally required to provide the Disclosure Statement at least 7 days before the lease is entered into.

Importantly, a lease may be considered “entered into” not only when signed, but also when the tenant takes possession of the premises, begins paying rent, or otherwise becomes legally committed.

For this reason, landlords and agents should provide the Disclosure Statement early in negotiations, ideally together with the draft lease documents.

Why Accuracy Matters

The Disclosure Statement must be accurate and complete in all material respects.

Errors or omissions relating to outgoings, incentives, fit-out obligations, or redevelopment plans can create significant legal and commercial risks.

For example:

• understated outgoings may mislead a tenant about the true cost of occupancy;
• failing to disclose planned refurbishment works may expose the landlord to claims later; and
• unclear incentive arrangements can lead to disputes about what was agreed.

A properly prepared Disclosure Statement helps ensure the tenant is fully informed before entering the lease and can significantly reduce the likelihood of future disputes.

Consequences of Non-Compliance

If a landlord fails to provide a Disclosure Statement on time, or provides one that is materially false, misleading, or incomplete, the tenant may have legal remedies available.

Depending on the circumstances, these may include:

• terminating the lease within the statutory period; or
• seeking compensation for losses suffered as a result of the defective disclosure.

These consequences can be commercially significant, particularly where incentives, fit-out contributions, or shopping centre arrangements are involved.

Practical Tips for Landlords and Agents

To minimise risk, landlords and managing agents should ensure that:

• the correct prescribed form is used;
• the Disclosure Statement is prepared early;
• the lease terms and disclosure documents are consistent;
• outgoings estimates are reasonable and accurate; and
• service of the document is properly recorded.

If negotiations continue after the Disclosure Statement has been issued, it should be reviewed and updated before the lease is finalised.

How Solari & Stock Can Help

A Disclosure Statement is a critical risk-management document in retail leasing. Proper preparation and timely service can help reduce disputes, preserve enforceability, and minimise the risk of compensation claims or lease termination.

The team at Solari & Stock can assist landlords, tenants, and managing agents with preparing and reviewing retail lease Disclosure Statements to help ensure compliance and protect your interests.

To speak with one of our experienced Solicitors call us on 8525 2700, click on the Book Now button below or click on the link below to request an appointment.

Article by Valentina Abouzeid
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