If you’re leasing a shop, office, warehouse, clinic or studio, you’re probably focused on rent, outgoings and how long you want the space for.
But when it comes time to move out, one clause can make the end of your lease surprisingly expensive: the make good clause.
A make good clause sets out what you must do to “make good” the premises at the end of the lease. Depending on how it’s drafted, it can mean anything from a quick clean and patch-up to a full strip-out and restoration to base building.
Below, we break down how make good obligations work in Australia, what small businesses often miss, and how you can manage the risk before you sign.
What Is A Make Good Clause In A Commercial Lease?
A make good clause is a part of a commercial lease that explains what condition you need to return the premises in when your lease ends.
In plain English, it answers questions like:
- Do you have to remove your fit-out?
- Do you have to repaint the walls?
- Do you have to repair damage (and how is normal wear and tear treated)?
- Do you need to reinstate original fixtures or finishes?
- Can the landlord require you to pay money instead of doing the work?
Make good clauses are common in commercial leases because landlords want certainty that they can re-lease the premises quickly, and often prefer the space returned to a “neutral” or “base building” condition.
Why Make Good Obligations Matter For Small Businesses
Make good costs can be significant and often hit at the worst time: when you’re relocating, winding down, or spending money to set up somewhere else.
It’s not unusual for disputes to arise because:
- the clause is vague (so both sides interpret it differently)
- your premises has changed over time and no one documented what was “original”
- the landlord expects a full strip-out, but you assumed you could leave improvements behind
- timing gets tight and you run out of days to complete work before handover
If you’re negotiating a lease (or preparing to exit one), a properly scoped make good clause can save you a lot of money and stress.
What Do Make Good Obligations Usually Include?
There’s no single “standard” make good clause in Australia. What you’re required to do depends on the lease wording, the condition report, and what alterations were approved during the term.
That said, make good obligations commonly include some combination of the following.
1. Cleaning And Removal Of Rubbish
This is usually the minimum expectation. It can include professional cleaning, removal of waste, and leaving the premises in a tidy condition (including any storerooms, bathrooms, and outdoor areas if you had access to them).
2. Repairs And Maintenance
Your lease may require you to repair damage you’ve caused, and in some leases you may also be responsible for deterioration that goes beyond what would usually be considered fair wear and tear.
This can include:
- patching holes in walls from shelving, signage, or TV mounts
- repairing broken tiles, doors, locks, or cabinetry
- fixing any damage from trades during your fit-out or operation
3. Repainting And Restoring Finishes
Some leases specifically require repainting (often to a neutral colour), re-polishing floors, or restoring surfaces to a particular standard.
This matters if your branding involved bold colours, feature walls, decals, or special coatings.
4. Removal Of Fit-Out (A “Strip-Out”)
This is where costs can rise quickly.
If the make good clause requires a strip-out, you may have to remove:
- counters and built-in joinery
- partition walls
- signage (including fixings)
- specialty lighting
- floor coverings you installed
- IT cabling and security systems
A strip-out obligation often goes hand-in-hand with restoring the premises back to “base building” (the landlord’s preferred blank canvas).
5. Reinstatement Of The Original Condition
Some clauses go further and require you to reinstate the premises to the condition it was in at the start of the lease.
This is why it’s so important to have a clear entry condition report (and photos). Without this, you may end up arguing about what “original condition” means.
6. Payment In Lieu (Instead Of Doing The Work)
Some leases allow the landlord to require you to pay an amount representing:
- the estimated cost to carry out make good works, and/or
- losses the landlord claims they suffer due to delay in re-letting
Whether payment in lieu is available (and how it operates in practice) depends heavily on the lease drafting, the facts, and sometimes the relevant State or Territory leasing rules.
Common Traps In Make Good Clauses (And How To Avoid Them)
Make good disputes often aren’t about whether you should make good at all. They’re about scope, evidence, and expectations.
Here are some of the most common traps we see for small businesses.
Trap 1: “Return To Base Building Condition” Without Explaining What That Means
“Base building” can mean different things in different premises. In some buildings it means exposed services and concrete floors. In others it means a particular ceiling grid, lighting standard, or air-conditioning layout.
What to do: try to negotiate a clearer description (or attach a schedule) that defines what must stay and what must be removed.
Trap 2: You Assume You Can Leave Your Fit-Out (But The Lease Says You Can’t)
It’s common for tenants to assume the landlord will want to keep a quality fit-out, especially if it’s modern and functional.
But if the make good clause requires removal, the landlord may still insist on a strip-out (even if they later re-install something similar for the next tenant).
What to do: if you’re investing in a significant fit-out, negotiate an option for landlord approval to leave items behind at the end of the lease.
Trap 3: Alterations Were Approved, But There’s No Clear Agreement On End-Of-Lease Treatment
You might have the landlord’s consent to install partitions, signage, or a treatment room fit-out, but the approval letter might not say whether you can leave it.
What to do: when you obtain consent for alterations, make sure the consent also addresses reinstatement (remove vs leave). This can reduce uncertainty later.
Trap 4: You Don’t Budget Time (Or Money) For Make Good
Make good works usually need to be completed before handover, and you may need to coordinate trades while you’re still operating or moving stock out.
What to do: plan early. If you’re considering leaving, start reviewing your make good obligations months in advance, not weeks.
Trap 5: The Clause Lets The Landlord Decide The Scope At The End
Some make good clauses are drafted so broadly that the landlord can effectively require “whatever is necessary” to restore the premises, with minimal objective limits.
What to do: a legal review can help identify if the clause is unusually one-sided and whether you have negotiation room. This is where a Commercial Lease Review can be particularly useful before you sign.
How To Negotiate A Make Good Clause Before You Sign
If you haven’t signed yet, you have the most leverage you’ll ever have. Even small changes to a make good clause can significantly reduce risk.
Here are practical negotiation points many small businesses consider.
Ask For A “Limited Make Good” Obligation
Instead of a full reinstatement, you can propose a clause that focuses on:
- cleaning
- repairing damage you’ve caused
- removing your trade fixtures (if any)
This is often more commercially fair if you’re taking the space “as-is” and making only minor changes.
Carve Out “Fair Wear And Tear” (Where Appropriate)
If the lease requires you to return the premises in “good repair”, you may be able to negotiate wording that excludes fair wear and tear (depending on the premises, the bargaining position, and the relevant leasing framework).
This can help reduce end-of-lease debates about minor scuffs, fading, or aging that naturally occurs over time.
Clarify What Happens To Your Fit-Out
For many small businesses, the fit-out is one of the biggest investments you’ll make.
You may want a clause stating that:
- you must remove the fit-out only if the landlord reasonably requests removal (with notice), or
- you can leave specified items, or
- you will not be required to remove certain upgrades (like new lighting or flooring) if they improve the premises
Build In A Practical Process At Lease End
A well-drafted lease can reduce conflict by requiring steps such as:
- a pre-exit inspection (for example, 2-3 months before expiry)
- a written make good scope from the landlord by a specified deadline
- a chance for you to rectify items before handover
This kind of process reduces last-minute surprises and can prevent disputes from escalating.
Document The Starting Condition Properly
In many make good disputes, the tenant and landlord disagree about what the premises looked like at the start.
Even if the landlord provides a condition report, consider taking your own dated photos and keeping them with your lease documents.
Get The Lease Professionally Reviewed
Commercial leases are negotiable more often than people think, particularly around end-of-lease obligations and risk allocation.
If you’re unsure what your make good clause really requires, it’s worth getting advice early rather than trying to interpret it during a stressful move. This is also a common time we see businesses seek Lease Review & Amendment Advice to negotiate fairer terms.
What If You’re Ending Your Lease: Practical Steps To Manage Make Good Obligations
If your lease is already in place and you’re approaching the end (or exiting early), you can still take steps to reduce the cost and disruption of make good obligations.
1. Check How Your Lease Is Ending
Your obligations can be affected by whether you’re:
- reaching the natural end date (expiry)
- terminating early (for example, by agreement)
- assigning the lease to a new tenant
- subleasing
If you’re planning to exit before the end of term, it’s important to understand the risks and any negotiated outcomes. In many cases, businesses seek Lease Termination Advice to clarify what’s required and what can be agreed with the landlord.
2. Consider Assignment (And Clarify Who “Makes Good”)
If you assign your lease to another business, your make good obligations may change depending on the lease and the assignment documentation.
Sometimes the incoming tenant takes over the premises “as-is”. Sometimes you still need to reinstate certain items. And sometimes the landlord requires conditions as part of their consent.
It’s also common for an assignment arrangement to document who is responsible for the end-of-lease condition. This is where a Deed of Assignment of Lease can be critical to avoid misunderstandings between you, the landlord, and the incoming tenant.
3. Get The Landlord’s Scope In Writing
If possible, request a written list of make good items from the landlord (or their property manager). Even if you don’t agree with everything, it gives you a clear starting point and helps you cost the work.
If the landlord refuses to specify requirements until after you vacate, you may be left exposed to a larger bill later.
4. Arrange A Pre-Handover Inspection
A pre-handover inspection can help identify issues while you still have time to organise trades and rectify problems on your terms.
This often works better than handing the keys back and waiting for a claim.
5. Don’t Assume You Can “Just Walk Away”
If you leave without properly addressing make good, landlords may:
- draw on your security deposit or bank guarantee
- invoice you for their contractor’s costs
- claim additional losses (depending on the lease wording)
If you’re exploring early exit options, it’s worth understanding the broader position around breaking a commercial lease agreement so you can plan the least risky path.
6. If You’re Negotiating A Mutual Exit, Document It Properly
When you and the landlord agree to end the lease early (or on expiry with agreed outcomes), a written document can record what happens with:
- make good obligations (waived, reduced, or replaced by a payment)
- timing for vacating and handover
- release of claims (so the issue doesn’t reappear later)
Depending on the situation, a Lease Surrender Agreement may be the right way to capture these terms clearly.
Key Takeaways
- A make good clause sets out the condition you must return the premises in at the end of a commercial lease, and it can range from basic cleaning to a full strip-out and reinstatement.
- Make good obligations can become expensive if the clause is vague, if the starting condition wasn’t documented, or if the lease gives the landlord broad discretion at the end.
- Before signing, try to negotiate clearer scope, fair wear and tear carve-outs (where appropriate), and practical processes like pre-exit inspections and written make good specifications.
- If you’re exiting, start early: confirm how the lease is ending, ask for the landlord’s requirements in writing, and plan your trades and timing well before handover.
- If you’re assigning or surrendering the lease, ensure responsibilities for make good are properly documented so you’re not paying for the next tenant’s changes later.
If you’d like help reviewing or negotiating a make good clause (or managing your make good obligations before you exit), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
