Commercial Building Disclosure Obligations

10 November 2011

Partner Michael Potts reports that from 1 November 2011, the Building Energy Efficiency Disclosure Act 2010 (Cth) (BEED Act) requires requires owners and lessors of affected commercial premises to obtain and register a Building Energy Efficiency Certificate (BEEC) before initiating any sales or leases of a building or tenancy. Disclosure must be made in all advertising material and made available to all potential buyers, tenants and sub-tenants when requested.

Background

The Australian Government Department of Climate Change and Energy Efficiency (DCCEE) manages the Commercial Building Disclosure (CBD) Program, which is designed to improve the energy efficiency of Australia's large office buildings.

The Building Energy Efficiency Disclosure Act 2010 (Cth) (BEED Act), implemented through the CBD program, forms part of a package of measures to encourage building energy efficiency developed by the Australian, state and territory governments.

Who is affected?

The BEED Act applies to corporate owners and tenants of disclosure affected buildings and disclosure affected areas of a building if:

the building or area has a net lettable area of at least 2,000 square metres; and
75% of the net lettable area is being used for administrative, professional or similar information-based activities, including any support facilities for those activities.

Disclosure Requirements

The full disclosure obligations under the BEED Act require commercial building owners and tenants proposing to sell or let large office spaces to have a valid, registered and current Building Energy Efficiency Certificate (BEEC).

A BEEC is comprised of:

a NABERS Energy star rating for the building
an assessment of tenancy lighting in the area of the building that is being sold or leased and
general energy efficiency guidance

BEECs are valid for 12 months and must be publicly accessible on the online Building Energy Efficiency Register. They must be registered through the Department of Climate Change and Energy Efficiency.

Exemptions

A building or area is not disclosure affected if:

it is new or has had a major refurbishment and a certificate of occupancy has not been issued or was issued less than two (2) years ago;
it is strata titled; or
the relevant lease is for a period of less than 12 months (including options).

An application for exemption from a CBD obligation can be made in writing (for a fee) to the secretary of the Department of Climate Change and Energy Efficiency.

Penalties

Civil penalties may be imposed for failing to provide access or information as required. The penalties are harsh. The maximum penalty for non-compliance is $110,000 for a body corporate and $38,500 for an individual (with exceptions). Daily penalties apply thereafter. Currently the maximum penalty is $11,000 per day.

The DCCEE can impose a penalty of up to one tenth of the maximum court imposed penalty by way of an infringement notice. Advertisements and transactions will be monitored to uncover breaches of the disclosure requirements.

For more information, please contact:

Michael Potts | Partner
Mullins Lawyers
t +61 7 3224 0300
f +61 7 3224 0333
mpotts@mullinslaw.com.au