Agents and Landlords - it’s time to revisit your commercial building disclosure obligations
Posted on May 02, 2013
The Commercial Building Disclosure (CBD) program has been operational for over two years. We believe it is an appropriate time for agents and landlords to revisit their compliance obligations to ensure they do not breach their statutory requirements which could lead to significant fines.
What does it apply to?
The CBD program applies to buildings for sale, lease or sublease if:
- at least 75% of the space of the building is office space;
- the total area for sale or lease is 2000sqm or more; and
- it has been at least two years since a certificate of occupancy was issued for the building.
The owner must comply with the CBD program if they wish to sell or lease the building.
Compliance involves obtaining a Building Energy Efficient Certificate (BEEC) and delivering a copy of it to the prospective purchaser, or tenant, as soon as possible.
NABERS requirements
Any advertisement for the sale or lease of the building must also clearly advertise the National Australian Built Environment Rating System (NABERS) rating. The NABERS rating is obtained from the BEEC.
Types of Building
The CBD program mainly affects city office towers. However, it may also affect office buildings in industrial parks and similar premises if at least 75% of the building is for office use and the total space is 2000sqm or more.
Where disclosure is or may be required
If there are multiple tenancies available for lease in a building at a specific time, each less than 2000sqm but collectively totalling 2000sqm or more, the CBD program may apply if there is a possibility that all collective space could be leased under a single lease.
If an area of at least 2000sqm is available for lease, but a prospective tenant only wishes to lease a portion of that space, the requirements to disclose will apply as the initial space available for lease would trigger the CBD program.
Where it is not required
However, if a building is at least 2000sqm, but at the relevant time the area available for lease is less than 2000sqm, the landlord does not have to comply with the CBD program, provide a BEEC, or advertise the NABERS rating.
Despite this, we recommend that if you manage an office building with an area of 2000sqm or more, you should always supply a BEEC and always advertise the NABERS rating to avoid inadvertent non-compliance.
In addition, agents need to be aware that a BEEC is only valid for 12 months. As such it must be regularly updated.
Consequences for Non-compliance
Failure to comply incurs significant fines up to $170,000. Ultimately, responsibility will rest with the building owner. However, agents may also be liable if they are “in any way, directly or indirectly, concerned in or a party to a contravention” of the CBD. This may include if an agent is aware that a BEEC needs to be provided or updated but failed to do so, and did not advertise the NABERS rating.
How Lynch Meyer can help
Lynch Meyer can advise on all aspects of the CBD program.