By John Cotter
From 1st November 2010 a raft of legislation and regulations came into effect to create the Commercial Building Disclosure Scheme (CBD Scheme). The new scheme requires a NABERS (National Australian Built Environment Rating System) Energy rating to be disclosed when office space of 2000sqm or more is offered either for lease or for sale by what the legislation refers to as a "constitutional corporation".
The CBD Scheme refers to "disclosure affected building" and "disclosure affected area of a building". Generally these are :
- A "disclosure affected building" is a building that is used, or is capable of being used, as an office and contains a nett lettable area of office space of 2,000 square metres or more. It should be noted, however, that new constructions (under two years old) and buildings held under Strata Title are not "disclosure affected buildings" even if they meet the other requirements.
- A "disclosure affected area of a building" is an area that is used, or is capable of being used, as an office, has a 2000 square metres or more nett lettable area, and is not a new construction or held under Strata Title.
Building Owners and Tenants
Under the new scheme, building owners and tenants (including lessors and sublessors):
- Must obtain, and register, a Building Energy Efficiency Certificate (BEEC) when selling or leasing a disclosure affected office building or area of a building.
- Must include the BEEC energy efficiency star rating for the building in any advertisement for the sale, lease or sublease of the building or area.
- Are required to provide information about, and access to, a disclosure affected office if requested by a CBD Accredited Assessor.
- Once a BEEC has been registered for a particular property it is publicly available on the Building Energy Efficiency Register.
There is a transition period for the first 12 months after 1st November 2010 during which a currently registered NABERS Energy base or whole building rating can be disclosed instead of a full BEEC.
To comply with the legislation and regulations, an energy efficiency rating for a building must be expressed:
- By using the rating from 0 to 5 worked out for the building under the NABERS Energy rating rules
- By adding the words "- star NABERS Energy rating" after the number
- With the rating prominently displayed within an advertisement
so that :
- it is clearly visible,
- it is not obscured, and
- the number, and the text included in the rating, is at least as large as the majority of the text contained in the advertisement.
Civil penalties of up to $110,000.00 for the first day, and $11,000.00 for each subsequent day, may be imposed by a Court for each breach of a disclosure obligation. Alternatively, the Secretary of the Department of Climate Change and Energy Efficiency can issue an infringement notice of up to $11,000.00 for the first day, and $1,100.00 for each subsequent day of non-compliance.
Requesting a BEEC
When a building owner, lessor or sublessor is not a constitutional corporation, there is not an automatic obligation to disclose a BEEC but a constitutional corporation with a good faith interest in buying, leasing or subleasing a disclosure affected office can request that the owner, lessor or sublessor provide a valid BEEC. The request must be in writing (which can include email) and may be made at any time whilst the owner, lessor or sublessor is offering, or inviting offers, for the sale, lease or sublease of a disclosure affected office.
Anyone who is offering a disclosure affected office 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. This obligation applies to such entities as individuals, trusts, partnerships and governments.
Non-compliance with these obligations attracts the same penalties as set out above.
CBD Accredited Assessors
If a CBD Accredited Assessor is engaged by the owner, lessor or sublessor of a disclosure affected office to produce a BEEC to satisfy a disclosure obligation, and the Assessor reasonably believes that an owner, lessee or sublessee of the building has information that is necessary for the purposes of the assessment, then the Assessor can require that person, by notice in writing, to provide the information. The Assessor may also request access to a disclosure affected office at a reasonable time for the purposes of conducting the assessment. There are also substantial penalties which apply to failing to provide access or information as required.
Exceptions to the Programme
Exception to the Programme is currently available to newly constructed office buildings (and areas within such buildings) for which the certificate of occupancy is less than 2 years old and to Strata Title premises.
In addition, the following transactions do not give rise to a disclosure obligation, even if the relevant office space is a disclosure affected building:
- The sale of a building through the sale of shares or units or the sale of a partial interest in a building, or
- Short term leases and subleases of 12 months or less (including any option to extend).
No action is required by the owner, lessor or sublessor to obtain an exception.
Exemptions from the Programme
An exemption from a disclosure obligation may be sought where a building or area is used for police or security operations and in cases where an energy efficiency rating cannot be assigned because of the characteristics of the office (for example where an office is undergoing major refurbishment and will be vacant for an extended period of time).
In these cases an application for exemption must be made with supporting evidence as prescribed in the legislation and regulations.
If you are thinking about selling, buying, leasing or subleasing office space then contact us to ascertain your rights and obligations in relation to the new legal requirements before any advertising commences.
For more information contact John Cotter at firstname.lastname@example.org.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.