Fair wear and tear is the gradual deterioration of a space through reasonable everyday use, such as minor carpet wear and wall scuffs. Tenant damage includes specific modifications or accidents, such as holes from screen mounts or flooring damaged by heavy equipment.
The distinction between these two categories often determines whether a tenant is liable for costly repairs during the make-good process.
What constitutes fair wear and tear?
Fair wear and tear refers to the gradual and normal deterioration of a commercial space through reasonable everyday use. This typically includes minor carpet wear, slight scuffing on walls, and small marks that accumulate over years of occupation. Because these results are expected in any functioning office, they are generally excluded from make-good obligations.
Examples of tenant damage
Tenant damage includes specific accidents or modifications that exceed reasonable use. Holes in walls from fitout fixings, flooring damaged by heavy equipment, or a broken floor tile from a dropped item are common examples. These items are not covered by fair wear and tear and must be rectified before the keys are handed back.
The “Who Installed What” dispute
Many disputes arise years into a tenancy when memories fade regarding whether a partition or piece of joinery was already there. If no record of the initial layout exists, proving the landlord installed the item is very difficult. Fitout records and landlord approval correspondence are the only reliable defence in these situations.
Why condition reports prevent disputes
A dated and witnessed condition report from lease commencement provides an objective benchmark for all make-good obligations. This report should include photos and written descriptions to remove any disagreement about the original state of the space. Without this factual record, original condition becomes an argument about memory rather than a factual question.
Make-good versus cash settlements
Some landlords accept a make-good equivalent, which is a cash payment instead of physical reinstatement works. This payment is usually calculated based on the estimated cost of the physical works required to restore the space. This option allows tenants to avoid the logistics of a strip-out while moving into a new office.
Managing end of lease liability
Vague lease language, such as requiring good repair and condition without a definition, is often where disputes are born. Tenants should document the space progressively throughout the lease to prevent damage from accumulating. Progressive Corporate can deliver make-good works that meet the specific standards Melbourne landlords expect for final sign off.
Frequently asked questions
What if my lease says “good repair and condition”?
This is vague language that often leads to disputes because the tenant and landlord may have different ideas of what is required.
Can I refuse to remove a partition the landlord installed?
Yes, elements installed by the landlord before lease commencement are generally the landlord’s responsibility, provided you have the records to prove it.
How is a make-good equivalent calculated?
The cash amount is typically based on the estimated cost of the physical works required to return the space to its original condition.
Questions to ask your fitout company before you sign
- Does this fitout design include elements that will be difficult to remove during make-good?
- Can you provide a detailed scope of works that matches the landlord’s original condition requirements?
- Do you have a track record of delivering make-good works that get signed off by Melbourne commercial landlords?