Make good clause explained
A make good clause sets out what a tenant must do to the premises when a commercial lease ends. It usually requires you to remove your fitout and signage, repair any damage and return the premises to the condition they were in at the start of the lease, fair wear and tear excepted. The exact obligation depends on the wording, so read the clause before you sign.
What a make good clause usually covers
Most clauses deal with some or all of these:
- removing your fitout, fixtures and signage
- repairing damage caused by the removal
- repainting and replacing floor coverings
- cleaning
- restoring services, such as electrical, data and air conditioning, to their original layout
Some leases go further and require you to return the premises to a “base building” or “warm shell” condition, even if they were fitted out when you moved in. That can cost far more than removing your own fitout.
Why make good causes disputes
Make good disputes usually start at the end of the lease, when the landlord and tenant disagree about:
- what condition the premises were in at the start
- whether an item is the tenant’s fitout or the landlord’s
- what “fair wear and tear” covers
- whether the landlord can claim the cost of work instead of the tenant doing it
- how much the work should cost
Most of these come back to the wording of the clause and the evidence of the starting condition.
Signing a lease with a make good clause? We check it as part of our lease review and tell you what to ask for. Have your lease reviewed.
What to check before you sign
| Check | Why it matters |
|---|---|
| The starting condition | Ask for a condition report with photos, signed by both parties. Without one, it is hard to show what you received. |
| Whose fitout it is | If the landlord’s fitout is already there, make clear you don’t have to remove or replace it. |
| Fair wear and tear | Make sure it is excluded. |
| Payment instead of work | Check whether the landlord can demand money instead of the work, and how the amount is set. |
| Time to do the work | Check whether you can do the work before the lease ends, or after, and whether rent is payable while you do it. |
If the lease is retail, your state’s retail leases Act may also limit what the landlord can require. See commercial lease vs retail lease for how to tell which applies.
At the end of the lease
Start early. Read the clause, find your condition report and photos, and get quotes for the work. If the landlord sends a make good claim, check it against the clause before you pay.
Questions
Something else? Enquire online or email us.
Do I have to make good if the premises were in poor condition when I moved in?
It depends on the wording. Many clauses require you to return the premises to the condition they were in at the start of the lease, so a condition report from the start matters. Some clauses require more than that.
Can the landlord ask for money instead of make good work?
Usually only if the lease allows it or you agree, and many leases do let the landlord choose between the work and a payment. If the work isn't done, the landlord can usually claim what it costs.
Is fair wear and tear excluded?
Usually, but not always. Check the clause says so.
Check the make good clause before you sign
Our fixed fee commercial lease review covers make good, outgoings, rent reviews, guarantees and options. You get written advice on what to change.
General information only, not legal advice. Every lease is different, so get advice on yours before you sign.