Be wary of make good clauses when entering a lease

We have recently been fielding several queries in relation to the Landlords rights to force a tenant to “make good” the premises. 

When Lessee’s are entering a lease, one of the last things that they consider is the requirement to make good the premises when the lease ends. At the beginning of the lease the lessee is not thinking about the end of the lease when they should be. When a lease ends the Lessor can enforce the “make good” clause. Make good' refers to the clause/s in a lease that set out how a tenant should leave a property at the end of the lease term.

The requirement is generally on a lessee to restore the premises to the state that the were in when the lease commenced. Therefore, when factoring in the costs of a “fit out” to a premises and the extent of the modification it helps to consider what the cost would be to remove the fit out if/when required to at lease end. 

We recommend that prior to entering a lease and commencing the fit out that the lessee ensure that the managing agents inspection report is accurate so that in the event that you are required to remove your fit out under the make good clause you are only put to the cost of returning the premises to their pre-lease condition and not an improved state i.e. fixing cracks that were already there. 

Please contact us if you require advice on the make good clause in your lease. 

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