Make good clauses at the end of a lease

What a make good clause can require

Common make good obligations include:

1. Removing your fit-out, signs, fixtures and equipment.
2. Repairing damage caused by the removal.
3. Restoring the premises to the condition at the start of the lease, or to a set standard such as bare shell.
4. Repainting, recarpeting or other redecoration.
5. Cleaning the premises.

The exact words decide the obligation. "Original condition" and "bare shell" can mean very different costs.

Before you sign: limit the cost

1. Read the make good clause with the fit-out clause.
2. Agree on a written record of the condition of the premises at the start, with dated photographs.
3. Exclude fair wear and tear if the clause does not already do so.
4. Exclude any fit-out that was there when you took the premises.
5. Agree whether you can pay an amount instead of doing the work.
6. Check whether the clause applies if you exercise an option, or only at the final end of the lease.

At the end of the lease

1. Check the date the lease ends and any notice you must give.
2. Read the make good clause again, with your condition report and photographs.
3. Ask the landlord in writing to confirm the work required.
4. Get quotes for the work.
5. Do the work before the lease ends, unless you agree a payment with the landlord.
6. Ask the landlord to inspect, and confirm in writing that the make good is complete.
7. Ask for the return of your bond or bank guarantee.

If you cannot agree on the cost

For a retail lease, the NSW Small Business Commission notes that the parties can negotiate a payment to the landlord instead of the work.

Where the lease provides for it, a certified quantity surveyor nominated by an industry body can make a binding decision on the cost.

The NSW Small Business Commission also offers mediation for retail lease disputes.

For a retail lease, a bank guarantee should be released within two months after the tenant leaves, unless money is still owed.

Common questions