In this edition of ‘It depends’, senior associate Chantal Kirkwood talks about the importance of timing for landlords in giving a lessor disclosure statement to a retail tenant.
Welcome to it depends. Today, we’ll be talking about timing and how it relates to a landlord giving a lessor disclosure statement to a retail tenant. A quick note before we start, today’s content focuses specifically on retail shop leases, that is, leases that are governed by the Retail Shop Leases Act.
At what point in the lease negotiation is a landlord required to give a lessor disclosure statement to a prospective tenant?
A landlord must give a lessor disclosure statement to a tenant at least seven days prior to the tenant entering into the lease. A tenant enters into the lease on the earlier of the date that all parties sign the lease or the date that the tenant first takes possession of the premises or the date that the tenant first pays rent.
What happens if the landlord doesn’t give the lessor disclosure statement within the required timeframe?
It depends. The Retail Shop Leases Act doesn’t impose any penalty on a landlord for failing to comply, but if the landlord does not give the lessor disclosure statement on time or gives a defective lessor disclosure statement, that being a lessor disclosure statement that is incomplete in relation to one of the material items or one of the material items is false or misleading, then the tenant has the right to terminate the lease within the first six months.
If a deal is running on a tight deadline, is there a way around the seven day requirement?
In the ideal world, a landlord would always ensure that a lessor disclosure statement is given well before the handover date. However, we understand that commercially and practically, this sometimes just doesn’t happen. Deadlines can be tight and fortunately, the Retail Shop Leases Act does allow for the waiver of time in some circumstances. To waive the time, the landlord must give the tenant a lessor disclosure statement and the tenant must give the landlord, unless they’re a major lessee, a signed legal advice report from their lawyer, which indicates that the tenant has been given advice about the meaning and legal effect of the waiver. The key thing to note here is that the landlord can’t avoid the obligation to give the lessor disclosure statement, but it can have the seven day time period reduced and that lessor disclosure statement, it still needs to be given to the tenant prior to the lease being entered into.
If you have any questions about the waiving of time or the giving of lessor disclosure statements generally, please don’t hesitate to give me or someone else in the CGW property team a call.