End Of Lease Make Good End Of Lease Make Good
If your commercial lease is coming to an end, you need to be aware of your “make good” responsibilities under your lease. You will be required to “make good” the premises before the lease end date which means of course, relocating before that date to allow time for defit and returning the property to its original state.
What does make good mean?
Make Good is a standard clause included in most commercial leases which requires tenants to return the property to its original state at the end of the lease. Make good clauses are most likely to appear in a lease contract where the building is leased as a shell or where the existing fitout is expected to be changed by the tenants.
In the excitement of planning a new vibrant workspace, end of lease provisions are often not given the attention they deserve by tenants when signing a lease. Make good clauses can be ambiguously worded or inserted into the lease agreement in a hurry creating uncertainty at the time the lease is being ended. In the event that a clause has not been inserted in the lease agreement, the tenant may may still be liable to return the premises in the original condition under common law.
How to plan an end of lease make good project
Check the lease agreement
Most leases have a vague definition of your responsibilities at lease end, some are simple and specific while others can list inclusions and exceptions in painful detail.
Write a Make Good list
Starting from the entrance to the premises, walk through and make a list of everything that you have changed. That includes what you have added and what you have removed.Here are some common fitout items that might help jog your memory:
- Fittings such as shelves
- Electrical points and lighting
- Painted walls and other decorations
- Floating floorboards or carpets
- Partitions
- Computer room or data centre
- Cabling
- Drapes and blinds
- Signage
- Air conditioning and heating.
Check with the landlord
OK so you have your list. Don’t bring out the wrecking ball just yet. First you should check with the landlord to see what they want. The property owner may see some or all of the changes you’ve made to the property as an improvement and will be happy for them to remain.
Some owners will accept a cash settlement in lieu of make good but in most cases you will be required to return the premises to the original condition. In most cases this will mean cleaning, repainting and recarpeting after the removal of your fitout items and repairs to original condition.
End Of Lease Make Good Project Management
Make good requirements may take time to plan and execute. There may be the need for environmental permits for the disposal of materials and work permits. Building management may need to be consulted on acceptable access, work times, dust control and noise levels. Time for demolition and clean up has to be allowed for along with scheduling of painters, plasterers and other trades and this all has to be completed before the lease end date. That means you can’t plan to relocate on the final day of your lease. Like any construction project, this required project management skills to avoid cost and time blowouts.
