Tenant’s “make good” obligation at the end of a lease

Posted on Apr 26, 2018 by Dean Frith   |   Categories: Commercial & Retailing Leasing

It is a very common provision in commercial and retail leases that a tenant is required to “make good” the leased premises at the end of the lease or upon vacating the property.

It is important for tenants when entering into a lease to make sure they understand their make good obligations and to seek legal advice where necessary.

In most instances the tenant is required to at least return the premises to the condition they were in when the lease commenced (except for fair wear and tear), remove their property and leave the premises in a clean and tidy state. But often the ‘make good’ provisions will go much further and place a significant burden on the tenant. A good property lawyer will be able to identify such terms, advise upon them and, if necessary, negotiate reasonable amendments to the make good clauses prior to entering into the lease.

Any ambiguity in the make good obligations of the tenant can lead to disputes at the end of the lease, which, for a tenant, can potentially put their bond at risk.

Three tips for tenants in relation to make good obligations:

• Take photographic evidence of the state of the premises at the start of the lease.

• Ensure that the make good obligations in the lease are adequately detailed and understood, including, where possible, the likely cost.

• As early as possible before the end of the lease the tenant should request details of the works that the landlord considers the tenant should carry out. This will allow a tenant sufficient time to negotiate those works against what they consider reasonable in light of the terms of the lease. It will also allow enough time to complete the works and have the landlord sign off on them.