A reminder to landlord’s and tenant’s when considering make good clauses in leases

The issue of make good is often not given much consideration at the time a lease is being negotiated, but rather only considered as the expiry date of the lease approaches or when the lease has already ended. The scope of a tenant’s obligation to make good at the expiry or earlier termination of a lease term is often a source of dispute between a landlord and tenant.  It is therefore important that the terms of the lease clearly define the scope of the tenant’s make good obligations as there will invariably be competing interests on the issue.  The landlord will own chattels installed by the tenant that have been converted into “fixtures” unless the lease provides otherwise. It is therefore important that the extent of the tenant’s make good obligations is clearly stipulated in the lease. An express acknowledgement as to the ownership of any items of property that the tenant wishes to remove from the premises at the end of the lease as well as ownership of or obligations in relation to items the tenant does not wish to remove at the end of its occupation should be included in the lease or in some other written form. It is also important to ensure that photographic and other evidence of the property condition at the commencement of the tenant’s occupancy is retained by both the landlord and the tenant until the tenant has vacated and completed its make good.

For further information on leasing, please contact our Property & Leasing team by email property@mst.com.au or by telephone +61 8540 0200.