How to comply if you are selling, leasing or subleasing
The Commercial Building Disclosure (CBD) Program mandates the disclosure of energy efficiency for most commercial office spaces of 1000 square metres or more. Your legal responsibilities are the same whether you are selling, leasing or subleasing a disclosure affected building or area of a building.
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When your legal responsibilities arise
Under the Building Energy Efficiency Disclosure Act 2010, legal obligations in relation to sale, leases and sub-leases arise when:
- a constitutional corporation advertises a disclosure affected building or area of a building for sale, lease or sublease
- a constitutional corporation offers to sell, lease or sublease a disclosure affected building or area of a building, or invites offers for the sale, lease or sublease of a disclosure affected building or area of a building
- a constitutional corporation requests a Building Energy Efficiency Certificate (BEEC) for a disclosure affected building or area of a building that is being offered for sale or lease by another entity (whether or not that entity is also a constitutional corporation). See Quick guide to the application of the CBD program.
What your legal responsibilities are
- You must obtain a BEEC, in accordance with sections 11 or 12 of the Act when selling, leasing or subleasing a disclosure affected building or area of a building. See the section on How to get a BEEC for details.
- You must include the NABERS energy efficiency star rating for the building which is on the BEEC in any advertisement for the sale, lease or sublease of the building or area in accordance with section 15 of the Act. See Advertising for details.
- You are required to provide information about, and access to, a disclosure affected building or area of a building if requested by a CBD accredited assessor in accordance with section 18 of the Act. (See the section on 'When you need to provide information and access for an assessment' for details).
When you need to register a BEEC
The aim of the CBD Program is to overcome barriers to accessing consistent and meaningful information about the energy efficiency of commercial office space. For this reason, your obligation to have a registered BEEC arises as soon as you approach the market - that is as soon as you make or invite offers, so that disclosure occurs before substantial negotiations start.
This means that you need to have registered your BEEC before commencing any advertising or making offers. To ensure that your sale or lease campaign is not delayed, it is a good idea to start preparing well before you intend to approach the market. For further information see How to get a BEEC.
What happens if you don’t comply with the requirement to register a BEEC?
Civil penalties of up to $275,000 for the first day of non-compliance and up to $27,500 for each subsequent day of non-compliance may be imposed by a court. Alternatively, The Department of Climate Change, Energy, the Environment and Waters may issue an infringement notice of up to $27,500 for the first day and up to $2,750 for each subsequent day of non-compliance.
Would a building owner be penalised if a tenant subleased their office space of 1000 square metres or more without disclosing a BEEC?
For subleases of a disclosure affected building (or a disclosure affected area of a building), the disclosure obligations fall on the lessee to obtain and register a BEEC, not the owner.
The building owner may need to provide information and access for an assessment so that the tenant can meet their obligations.
Is a BEEC required if there are multiple spaces for lease within a building, which are individually less than 1000 square metres?
Unless the building is considered an exception to the disclosure requirements, or has been granted an exemption, a BEEC is required for the combined area if:
- an offer to lease multiple spaces within one building is stated to be for the combined spaces that altogether exceed the 1000 square metres threshold
- an offer to lease an undefined combination of the spaces includes combining spaces that together would exceed the 1000 square metres threshold
- an offer might otherwise lead to spaces that in combination exceed the 1000 square metre threshold being leased together under a single lease.
What happens if the available office space offered is more than 1000 square metres, but a potential lessor only wants to lease part of the space?
The disclosure obligations are still triggered because the space on offer for lease exceeds the threshold of 1000 square metres or more.
What happens if a floor of a building has a tenancy lighting assessment but the lessor only wants to lease part of the floor?
If the part of the floor available for lease covers more than 1000 square metres and a current, valid BEEC covers the whole floor, then the lessor can use the existing BEEC when marketing and advertising the space for lease.
If only a current tenancy lighting assessment has been completed, then the lessor needs to engage a CBD accredited assessor to complete a NABERS Energy rating and apply for a BEEC.
If the total space available for lease is less than 1000 square metres, then the disclosure obligations are not triggered because the area does not exceed the threshold, and there is no need to obtain a BEEC before advertising or negotiating the lease on this area.
When you need to provide a BEEC—even if you are not a constitutional corporation
When a building owner, lessor or sublessor is not a constitutional corporation, there is no automatic obligation to have a BEEC when selling, leasing or subleasing a disclosure affected building or area of a building. However, under section 12 of the Building Energy Efficiency Disclosure Act 2010, a constitutional corporation with a good faith interest in buying, leasing or subleasing a disclosure affected office can ask the owner or lessor to provide a valid BEEC. The request must be in writing (which can include email), and may be made at any time while the owner, lessor or sublessor is offering or inviting offers for the sale, lease or sublease of a disclosure affected building or area of a building.
Anyone who is offering a disclosure affected building or area of a building for sale, lease or sublease and who receives such a request from a constitutional corporation, has a legal obligation to register a valid, current BEEC and to provide a copy to the constitutional corporation, unless an exception or exemption applies (see Exceptions and Exemptions). This obligation applies to such entities as individuals, trusts, partnerships and governments.
What happens if you don’t comply with a request to provide a BEEC to a constitutional corporation?
Civil penalties of up to $275,000 for a body corporate and $96,250 for an individual may be imposed by a Court for failing to provide a BEEC in accordance with a section 12 obligation. Alternatively, the Secretary of the Department of Climate Change, Energy, the Environment and Waters may issue an infringement notice with a penalty of up to $27,500 for a body corporate or $9,625 for an individual.
What do to about unsolicited offers for your building
The energy efficiency disclosure obligation in section 11 of the Building Energy Efficiency Disclosure Act 2010 potentially applies in relation to four types of conduct. These are where the constitutional corporation is:
- offering to sell the whole building
- inviting offers to purchase the whole building
- offering to let or sublet all or part of the building
- inviting offers to lease or sublease all or part of the building.
Unless an exception applies or an exemption has been granted the energy efficiency disclosure obligations are triggered as soon as a constitutional corporation that has received an unsolicited offer enters into any kind of negotiation with the person who made the offer about the terms of sale, lease or sublease. This is because the constitutional corporation would be regarded as engaged in at least one of the four types of conduct listed above, depending on the particular circumstances.
Unless you propose to accept the offer unconditionally, you should not enter into negotiations without first registering a valid, current BEEC. You may also reject the offer.
Building owners and prospective sublessors who want to be able to entertain unsolicited offers without delay should consider maintaining a valid current BEEC at all times.