Make Good

Time and time again we experience conflict with tenants at the end of a lease over the terms and conditions of the Make Good obligations.

Requiring a tenant to make good commercial premises at the end of a lease term is a reasonable expectation of the landlord. The makegood can take many forms from a simple clean to a full removal of all fixtures and fittings and return to base build configuration. The details of the obligations will be documented in the lease and it is up to the tenant to make sure they understand what is expected at the end of the lease.  

This topic remains the leading point of contention with tenants as most do not pay enough attention to establishing a clear understanding of what is expected. Given the make good is completed at the end of the lease, if the cost has not been budgeted it can lead to an unwelcome surprise. Often we are confronted with a scenario where the tenant is totally unaware there is an obligation until we bring it to their attention. 

The best time for a tenant to establish an understanding of this topic is at the start of lease negotiations. A clear understanding of the Landlords expectations can help in the negotiation process and may also establish how the tenant treats the premises during the lease term. Seeking leniency at the end of the lease term is too late, especially if it is in poor condition.    

A clear and detailed Entry Condition Report (ECR) with photos is a must for every tenant and landlord. It is impossible to argue with a photo and the ECR provides the best evidence of tenancy condition for both parties at the start of the lease. 

Establishing a clear understanding of the wording in the lease is also important. For instance, a tenant may have moved into premises that had been fitted out by an earlier occupant. Given that scenario the tenant may think that anything to do with the existing fitout does not apply to them. However, some leases carry a condition that the make good applies to any fittings that are in place, even if installed by a previous tenant. This example is a simple case of a few words making a big difference to a tenants cost when exiting the premises. 

Tenants should always seek legal advice in this matter as understanding the obligation at lease end will save a lot of time and angst when it is least welcomed. 

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