Make-good obligations are legal requirements in a commercial lease to restore a tenancy to an agreed condition before the lease ends. This process typically involves removing the business fitout and repairing damage before handing the keys back to the landlord.
The specific scope of work depends entirely on the wording of the lease agreement.
Common make-good requirements
Most obligations include removing partitions, joinery, and floor finishes installed during the tenancy. These works often require reinstating HVAC, electrical, and plumbing services to their original configuration.
Base build versus warm shell
Base build condition requires stripping the space back to the raw slab and core walls. Warm shell is less extensive and leaves basic services like lighting and air conditioning intact while removing all tenant fitout.
Cash settlements and legal reviews
Some leases allow a make-good equivalent payment instead of physical works. Because these clauses are legally binding, a commercial lawyer should review any restoration requirements before a lease is signed.
How to manage your exit
Early planning prevents tight timelines and unmanaged costs as the lease expiry approaches. Progressive Corporate offers free consultations to review lease requirements and provide a clear picture of the necessary works.
Frequently asked questions
Is make-good the same as cleaning?
No. Make-good is a legal construction obligation that often involves demolition and trade contractors, not just general cleaning.
Why do landlords insist on make-good?
Landlords want certainty about the condition of the space so they can re-lease it without funding a full strip-out themselves.
What is the most common make-good dispute?
Disputes often arise over obligations to return a space as at lease commencement because parties may disagree on what the original condition looked like.
Questions to ask your fitout company before you sign
- Does the lease specify a base build or warm shell return?
- Is there an option for a cash settlement in lieu of physical works?
- How will the original condition be verified if the lease requires return as at lease commencement?