Lessor’s Disclosure Statement For Commercial Lessors In Australia

If you’re leasing out a shop, office, warehouse or other business premises, you’ve probably realised that “just signing the lease” is rarely the whole story.

In many parts of Australia (especially for retail leases), lessors have a legal obligation to give the tenant a lessor’s disclosure statement before the lease is entered into. Done properly, a lessor’s disclosure statement can prevent misunderstandings, reduce disputes, and help you lock in a cleaner lease negotiation from the start.

Done poorly (or not done at all), it can create major risk - including delays, and (in some jurisdictions and scenarios) tenant rights to terminate or seek remedies. The exact consequences depend on the state or territory, whether the lease is covered by the local retail leasing regime, and the nature of the non-compliance.

This guide walks you through what a lessor’s disclosure statement is, when you need one, what it usually includes, and a practical process you can follow to get it right.

What Is A Lessor’s Disclosure Statement (And Why Does It Matter)?

A lessor’s disclosure statement is a document you provide to a prospective tenant that sets out key information about the lease and the premises. It’s designed to make sure the tenant can make an informed decision before signing.

From a small business landlord perspective, a lessor’s disclosure statement matters because it:

• Sets expectations early (especially around outgoings, rent review methods, and what the tenant is responsible for).
• Reduces disputes by putting key deal points in writing in a structured way.
• Supports enforceability (in many retail leasing regimes, disclosure is closely tied to tenant rights and remedies).
• Improves negotiation efficiency by forcing clarity on issues that otherwise blow up late in the deal.

In practice, a lessor’s disclosure statement is often paired with (or supported by) the lease itself, any incentive deed, any fitout arrangements, and sometimes a landlord disclosure checklist or template published by the relevant state authority (where applicable).

It’s also worth noting that “commercial lease” is a broad term. Some disclosure obligations apply mainly to retail leases (for example, shopping centres and many street-front shops), while other commercial leases may not have the same formal disclosure statement requirements.

If you’re unsure whether your lease is a retail lease and what rules apply, getting the lease documented and checked early is crucial - a Commercial lease review can help you identify your obligations before you exchange anything with the tenant.

When Do You Need To Provide A Lessor’s Disclosure Statement?

Whether you need to provide a lessor’s disclosure statement depends largely on:

• the state or territory where the premises are located
• whether the lease is covered by the retail leasing legislation in that jurisdiction
• the type of premises and permitted use (retail, service retail, office, industrial, etc.)
• the tenant (for example, some regimes carve out certain larger tenants or certain categories of lease)

Retail Leases Are Where Disclosure Usually Bites

Most of the strict disclosure statement rules arise under retail lease legislation. For example, in NSW, retail leases are regulated under the Retail Leases Act NSW, which includes disclosure obligations and consequences for non-compliance.

Other states and territories have their own retail leasing legislation and (in some cases) prescribed forms and specific disclosure content requirements. While the details vary, the common theme is that the law tries to protect tenants by ensuring transparency around things like outgoings, rent review, and the practical realities of operating from the premises.

Timing: Usually Before The Lease Is Entered Into

As a general rule, you should provide the lessor’s disclosure statement before the lease is entered into. Many retail leasing regimes also require this to be done within a minimum timeframe before the tenant enters into the lease - and those timeframes differ between jurisdictions.

From a practical standpoint, you’ll usually want your disclosure statement finalised once:

• the key commercial terms are agreed (rent, term, options, incentives, outgoings), and
• you’ve decided what lease form you’ll use (and whether it’s retail or non-retail)

If you’re negotiating a renewal, the disclosure rules can still apply - and renewal timing is often a pain point. If you’re working out when you need to send documents for a renewal, it’s helpful to map your timeline against your state rules (for example, lease renewal notice periods can affect how you plan disclosure and option notices).

What Should A Lessor’s Disclosure Statement Include?

The content of a lessor’s disclosure statement can be dictated by legislation (including mandatory forms) for retail leases. Even where a specific form is not mandated, the concept is broadly the same: you’re disclosing the key terms and costs that affect the tenant’s decision.

While the exact items vary by jurisdiction, a lessor’s disclosure statement commonly covers the following categories.

1) Key Parties, Premises And Lease Structure

• Who the lessor is (including entity details and contact details)
• Who the tenant is (or intended to be)
• The premises address and a description of the area/space
• The term, commencement date, and any options to renew
• Any exclusivity arrangements (if relevant) or trading restrictions (common in centres)

2) Rent, Rent Review And Incentives

• Base rent and how/when it’s payable
• Bond / security deposit and bank guarantee details (if applicable)
• Rent review method (CPI, fixed %, market review, etc.) and when reviews occur
• Any incentives (rent-free period, fitout contribution, relocation rights, etc.) and how they work in practice

Be especially careful that the disclosed rent review method matches what appears in the lease. If the tenant signs based on one understanding and the lease says another, this is exactly the type of mismatch disclosure regimes try to prevent.

3) Outgoings And Other Operating Costs

Outgoings are one of the biggest triggers for disputes, because tenants often focus on base rent and underestimate the true occupancy cost.

Your lessor’s disclosure statement commonly needs to address:

• what outgoings are payable by the tenant (for example, rates, strata/owners corporation, building insurance and centre management fees, if applicable)
• how outgoings are calculated and recovered
• estimate amounts (often based on the last year or a reasonable forecast)
• any special charges (for example, marketing levies or promotion funds, and turnover rent in some retail models)

Note: what can legally be recovered as outgoings (including whether land tax can be passed on) differs by jurisdiction and sometimes by lease type. Make sure your disclosure and lease reflect the rules that apply to your premises.

If you’re unsure how to frame outgoings and other property charges clearly, it helps to sanity check the commercial model and drafting approach - this is often covered during a Retail lease review.

4) Permitted Use, Fitout, Repairs And Maintenance

A lessor’s disclosure statement will usually deal with the practical “who does what” issues, such as:

• the permitted use of the premises (and any restrictions)
• fitout requirements, approvals, and timing
• make-good obligations at the end of the lease
• repairs and maintenance responsibilities (including for plant and equipment like air-conditioning)

These are high-stakes items because they affect cost, timing, and whether the tenant can actually operate as planned.

5) Special Conditions That Change The Risk Profile

From a risk management perspective, your lessor’s disclosure statement should not “bury the lede”. If the deal includes unusual conditions, they need to be disclosed clearly and consistently with the lease, such as:

• relocation rights (common in shopping centres)
• redevelopment clauses
• demolition clauses
• early termination rights
• constraints on signage
• constraints on trading hours (especially centre rules)

How To Prepare A Lessor’s Disclosure Statement (A Practical Process)

Even if you’ve leased premises before, disclosure can become messy when negotiations move quickly or when multiple advisers are involved. The goal is to build a repeatable internal process so you don’t miss anything.

Step 1: Confirm Whether The Lease Is Retail (And Which Regime Applies)

Start by confirming:

• the premises location (state/territory)
• the tenant’s proposed use
• whether the premises falls under retail leasing legislation

If you operate across multiple states, be careful about assuming the same rules apply everywhere. For example, your renewal and notice planning may look different across jurisdictions (including lease renewal notice periods in Queensland).

Step 2: Lock In The Commercial Terms First (But Don’t Wait Too Long)

Disclosure is only useful if it reflects the real deal. Try to get alignment on:

• rent and rent review structure
• outgoings treatment
• lease term and options
• incentives and any “clawback” terms
• fitout responsibilities and timing

At the same time, avoid leaving disclosure until the last minute. If you hand the tenant disclosure at the eleventh hour, you increase the risk of delays and last-minute renegotiations - and, in some jurisdictions, you may not meet the minimum disclosure timeframe.

Step 3: Prepare Your Outgoings Estimates Carefully

Outgoings are where lessors can accidentally overpromise or under-disclose.

Practically, you’ll want to gather:

• last financial year’s outgoings (if the property has been operating)
• any new contracts or changes expected next year (cleaning, security, centre management, repairs)
• details of what will be recovered from the tenant and what will remain your cost

If the property is new or recently renovated, you may need to use reasonable projections - but you should still document the assumptions so you can explain the figures if the tenant questions them later.

Step 4: Make Sure The Lease And Disclosure Statement Match

This sounds obvious, but it’s one of the most common failure points.

Before sending the lessor’s disclosure statement:

• cross-check rent, rent review, outgoings and term details against the lease draft
• confirm the incentive deed (if any) is consistent with what’s disclosed
• ensure any “special conditions” in the lease are clearly reflected in disclosure

If you’re changing deal terms during negotiation, treat it as a trigger to review whether you need to update the lessor’s disclosure statement before signing.

Step 5: Keep Evidence Of When And How You Served Disclosure

Service and timing can matter just as much as content. In a dispute, you may need to prove:

• what document you served (version control)
• when you served it
• how you served it (email, post, in person)

A simple internal practice is to save a PDF copy of the exact disclosure statement served, keep the email sending record, and note the date in your leasing file.

Step 6: Plan For Assignment, Subleasing Or Exit Scenarios

Even at the start of a lease, it’s smart to think ahead. Many tenants will eventually want to:

• assign the lease as part of selling their business
• sublease part of the premises
• negotiate an early exit if trading conditions change

Your lease should deal with these scenarios, but your disclosure approach should also avoid setting expectations that conflict with the lease’s consent processes.

If you’re allowing an assignment (or you expect it to happen down the track), documenting the process properly is critical - including using a Deed of assignment of lease where appropriate.

Common Mistakes Lessors Make With Disclosure Statements (And How To Avoid Them)

Most disclosure problems aren’t deliberate - they happen because leasing moves fast, property costs change, or someone reuses old documents without checking the details.

Mistake 1: Treating Disclosure As A “Box-Ticking” Exercise

A lessor’s disclosure statement is not just admin. It’s a risk document.

If you treat it as a formality, you’re more likely to miss the cost items that later become disputed (especially outgoings, repairs, and marketing levies).

Mistake 2: Under-Explaining Outgoings

“Outgoings as per lease” is usually not enough. Tenants want to understand the true cost of occupancy.

Under-disclosure can expose you to disputes and, depending on the jurisdiction and the issue, may give the tenant statutory remedies.

Mistake 3: Not Updating Disclosure When The Deal Changes

If you negotiate a rent-free period, change the term, or add a new outgoings category late in the process, you should assume disclosure needs to be checked (and possibly updated) before signing.

Mistake 4: Giving The Tenant Multiple Conflicting Versions

Version control matters. If you’ve got three drafts floating around with slightly different numbers, you’re creating a dispute-ready environment.

Have a clear rule internally: one “final disclosure statement” version that is served, saved, and referenced in the lease file.

Mistake 5: Not Thinking About The Endgame

Disputes often arise at the end of the lease: make-good, repairs, outgoings reconciliation, and exit rights.

While disclosure is mainly about entry into the lease, a poorly documented start can snowball into end-of-lease disputes - and those disputes can be expensive, especially if they lead to a breakdown and you end up negotiating breaking a commercial lease agreement earlier than planned.

Key Takeaways

• A lessor’s disclosure statement helps tenants understand the key terms and likely costs of a lease before signing - and it can materially reduce disputes if done properly.
• Disclosure obligations most commonly apply to retail leases, and the rules (including prescribed forms, timeframes and consequences) differ depending on the state or territory where the premises are located.
• Your lessor’s disclosure statement should clearly cover rent, rent review, outgoings, incentives, permitted use, and any special conditions that change the tenant’s risk profile.
• Make sure the disclosure statement and the lease match, and keep clean evidence of when and how disclosure was served.
• Common disclosure mistakes include under-disclosing outgoings, failing to update disclosure when terms change, and letting multiple inconsistent versions circulate.

This article is general information only and not legal advice. If you’d like help preparing or reviewing a lessor’s disclosure statement (or the lease documents it needs to align with), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.