Make Good Clauses Explained

This guide explains how make good clauses generally work. It is not legal advice. Leases differ, and the rules that apply can vary by state and by type of lease — for anything that matters, have your lease reviewed by a lawyer.

What a make good clause is

A make good clause is the part of a commercial lease that says what condition the premises must be in when the tenant hands them back. In practice it answers three questions:

1. What must be removed? Usually the tenant's fit-out — partitions, joinery, signage, cabling, supplementary services.
2. What must be reinstated? Often ceilings, lighting, floor coverings, paint and base building services.
3. What must be repaired? Damage beyond whatever the lease allows for fair wear and tear.

It sounds simple. Disputes arise because the answers depend on the exact words used, what documents the clause refers to, and what everyone remembers about the premises years earlier.

The common types of wording

Make good clauses come in many forms, but most fall into a few patterns.

"Original condition" or "condition at the commencement date." The tenant must return the premises to the condition they were in when the lease started. This is only as clear as the evidence of that condition. Without photos or a condition report from move-in, it becomes one party's memory against the other's.

"Base building" standard. The tenant must strip back to the landlord's standard specification — typically the building's standard ceiling grid, lighting, floor finish and services. This is common in office buildings and is often clearer, especially if the landlord has a written base building specification.

Removal only. The tenant must remove its fit-out and make good any damage caused by the removal, but is not required to reinstate new finishes. This is the lightest version for tenants.

Schedule or specification. The clause refers to a make good schedule, a fit-out approval or the landlord's make good requirements. The schedule, not the clause, then defines the work — so find it early.

"Fair wear and tear excepted." Many clauses exclude normal wear from the obligation. That helps tenants, but it is a matter of judgement, and what counts as fair wear on carpet or paint after several years is often where negotiation happens.

Landlord's option. Some clauses let the landlord choose, near the end of the lease, whether the tenant removes the fit-out or leaves it in place. If yours does, the notice period and timing matter.

What a make good commonly includes

Depending on the wording, a make good may involve:

• Removing partitions, glazed offices, joinery and kitchens.
• Removing signage and repairing fixing holes.
• Removing supplementary air conditioning, server room equipment and special services.
• Removing redundant data and electrical cabling back to the source.
• Reinstating the ceiling grid and tiles.
• Returning lighting to the base layout.
• Removing tenant floor coverings and, in some leases, laying new base building carpet.
• Patching and painting walls, columns and doors.
• Repairing damage to the base building.
• A final clean, and returning keys and access cards.

Asbestos is a separate issue. In older buildings, any asbestos affected by the works is identified from the building's asbestos register and removed by a licensed asbestos removalist.

How to read your own clause

Before anyone walks the floor, collect:

• The make good clause and any clauses it refers to, such as alterations, repairs and yielding up.
• The fit-out approval or schedule from when you moved in.
• Any condition report or photos from lease commencement.
• Variations, extensions or side letters that changed the obligations.
• The landlord's make good requirements, if they have issued them.

Then ask:

1. Does the clause point to original condition, base building standard, a schedule, or removal only?
2. Is fair wear and tear excluded?
3. Does the landlord have an option to keep the fit-out?
4. Are there notice periods or deadlines for the landlord to state requirements?
5. What happens if the work is not complete by the end of the lease?

If any of those answers is unclear, that is the point to involve your lawyer or leasing adviser — not after the works are finished.

Timing and holding over

Make goods take longer than tenants expect. A realistic sequence is:

1. Lease review and draft scope — weeks, depending on how easy the documents are to find.
2. Landlord agreement on the scope — on the landlord's timetable.
3. Building approvals — work permits, contractor inductions, insurances, lift and dock bookings.
4. Physical works — often after hours in occupied buildings.
5. Landlord inspection and defects — and time to close out the list.

If the work runs past the lease end date, the lease may treat you as holding over, often with rent continuing. Starting several months before expiry is the simplest way to avoid that.

Negotiating a make good

Make goods are often more negotiable than tenants assume.

• At the start of a lease, negotiate the clause itself. Record the premises' condition in photos and a written report, and try to agree a clear base building standard.
• During the lease, keep approvals and records for every fit-out change, so there is no argument later about what was the tenant's.
• Near the end of the lease, ask whether the landlord wants the fit-out removed. An incoming tenant may be able to use it.
• A payment instead of works is sometimes agreed, where the landlord prefers to handle the space themselves. Document it properly.

Avoiding disputes

• Agree the scope in writing with the landlord before works are booked.
• Photograph the premises before, during and after the works.
• Use contractors who work to the building's rules and supply the documentation building managers ask for.
• Walk the space with the landlord's representative when works finish, and close out defects quickly.
• Keep every document until any security has been returned.

If you're in Sydney, we can price a make good against your lease clause and the landlord's schedule after a site walk.

Where to go next

• Lease make good — how we scope and deliver end-of-lease works.
• Office strip outs — removing a fit-out in an occupied building.
• Strip-out cost guide — rough bands, and why make goods are priced to the lease.