PA Law Articles · Commercial Leasing · South Australia
What are commercial lease make good clauses?
Commercial lease make good clauses set out the condition in which a tenant must return commercial premises when the lease ends. Depending on the lease and applicable law, it may require fit-out removal, repairs, repainting, cleaning or reinstatement. Returning the keys does not necessarily discharge those obligations.
Imagine closing your business premises, handing back the keys and then receiving a substantial bill for work you thought was unnecessary. That is the risk highlighted in PA Law’s short video about commercial lease make good clauses.
For businesses in Gawler, Adelaide and across South Australia, the practical question is straightforward: what will you have to remove, repair and pay for when you leave? Understanding the answer before you commit helps you assess the full cost of occupying the premises.
What work can a make good clause require?
The wording varies. A lease might require some or all of the following:
Removal of fit-out and signage. This might include counters, partitions, shelving, floor coverings and signs installed for the business.
Repair of damage. Removing fittings can leave holes, damaged surfaces or disconnected services that need attention.
Repainting and cleaning. The lease may specify a particular standard of presentation at handover.
Reinstatement. Some clauses require a return to an earlier condition, potentially including a bare shell, even where the tenant considers the alterations an improvement.
These are examples of possible requirements, not a standard list that applies to every tenancy. Read the make good clause alongside the repair, maintenance, alterations and yielding-up provisions. Check any fit-out deed, incentive agreement, licence and later variation as well.
Does landlord approval mean your fit-out can stay?
Not necessarily. Permission to install a fit-out may be separate from permission to leave it behind. If the landlord agrees that particular items can remain, record the arrangement clearly in writing and identify how it affects the existing make good obligations.
Commercial lease make good clauses: 7 checks before signing
Ask for clear answers to these questions while you still have an opportunity to negotiate the proposed terms.
1. What condition must the premises be returned in? Identify the precise handover standard. “Original condition”, “base building” and “good repair” may involve different work. Ask which date and condition the clause refers to, particularly if you are taking over an existing business or renewing a lease.
2. What was already there? Prepare an agreed condition report with dated photographs. Record existing defects and identify landlord-owned fixtures, earlier fit-out and items you will install. A useful report covers the floor, walls, ceiling, services and any areas affected by the proposed work.
3. Which items must be removed? List the items individually where possible. For a café, that could include a counter, exhaust system, grease trap connections or signage. Check ownership and approval requirements before assuming any equipment can be removed or left behind.
4. Is fair wear and tear excluded? Do not assume that a general fair wear and tear exception overrides a separate obligation to repaint, replace or reinstate. Ask how the relevant clauses work together and whether the proposed exceptions adequately protect your business.
5. Who decides what stays? If the landlord can elect to retain items, negotiate when that decision must be communicated. A written decision early enough to obtain quotes and arrange trades can reduce uncertainty. Clarify whether retained items satisfy the relevant removal obligation.
6. When must the work be finished? Check the contractual deadline, access arrangements, building rules, required consents and contractor requirements. Work may need to be completed before the lease expires, leaving less time for trading than you expected.
7. Can the scope or cost be made more predictable? Consider a defined schedule of work, exclusions for pre-existing defects and improvements, or an agreed payment arrangement. A cap or payment in place of work only assists if it is properly agreed and clearly states which obligations it settles.
How does South Australian leasing law affect the review?
The Retail and Commercial Leases Act 1995 (SA) may apply to the premises. Coverage depends on the statutory definitions, exclusions and circumstances; the label on the lease is not enough. Where the Act applies, it overrides inconsistent provisions of a lease or collateral agreement.
A review should therefore consider both the documents and the applicable law. A landlord’s demand is not, by itself, proof that every item claimed is recoverable.
Read the Retail and Commercial Leases Act 1995 (SA)
What should you do before your commercial lease ends?
Start early enough to resolve the scope of work and meet the lease deadlines. The time needed will depend on the premises, approvals and extent of the proposed work.
Gather the complete documents. Locate the signed lease, disclosure statement, condition report, fit-out approvals, photographs, variations and relevant correspondence. If the lease was assigned, include the assignment documents.
Request an itemised scope. Ask the landlord to identify the work it requires, the lease provisions relied on and any items it agrees can remain. Compare that request with the documents before accepting the scope.
Obtain suitable quotes. Give contractors the same clear specification so their quotes can be compared. Include removal, disposal, repairs, necessary approvals and access restrictions in the planning.
Document any negotiated outcome. If the parties agree on a reduced scope or payment instead of work, record exactly what is being settled. Address remaining obligations and the treatment of security. A payment alone may not amount to a complete release.
Keep evidence at handover. Retain invoices, completion records and dated photographs. Arrange a joint inspection where possible and seek written confirmation of the work accepted and any matters still outstanding.
What if you receive a make good bill after leaving?
Check the demand promptly. Ask for an itemised calculation, supporting quotes or invoices, photographs and the contractual basis for each item. Compare the claim with the initial condition, agreed scope, completed work and any written release.
The fact that the lease has ended does not automatically dispose of a valid claim. Equally, receiving an invoice does not establish that the amount is payable. The documents, evidence and legal basis of the claim need to be assessed.
Obtain advice about any response deadline or proposed use of a bond or bank guarantee. South Australia’s Small Business Commission also offers assistance with retail and commercial leasing disputes.
Small Business Commission SA leasing information
Frequently asked questions
How much does commercial lease make good cost?
There is no single standard cost. The scope, premises, condition, access and required trades all affect the amount. The $30,000 figure in PA Law’s video is an illustrative scenario, not a quoted price, average or prediction for your lease.
Does handing back the keys end my liability?
Not automatically. An unfulfilled make good obligation may remain relevant after handover. Check the lease, the circumstances of its ending and any settlement or release before assuming your obligations are complete.
Can I pay money instead of doing the work?
Sometimes, if the lease permits it or the landlord agrees. The written arrangement should state the amount, the work it replaces and the claims being released. Clarify any separate rent, outgoings or security issues.
Does selling the business remove my make good obligations?
Do not assume so. Review the lease, assignment or surrender documents, any release and applicable statutory rules. A buyer taking over the premises does not by itself answer who remains responsible for particular obligations.
Can a landlord require more than cleaning?
Potentially. Depending on the enforceable lease terms, make good may include removing fit-out, repairing damage, repainting or reinstating alterations. Cleaning alone may not satisfy the required handover condition.
Commercial lease advice in Gawler and Adelaide
Before signing, renewing, taking over or leaving commercial premises, PA Law can review the documents and explain the make good obligations affecting your business. We can also assist with proposed amendments and advice about disputed requirements.
Based in Evanston South, PA Law assists businesses in Gawler, Adelaide and across South Australia. When you contact us, tell us whether you have already signed and flag any expiry, renewal or response deadline.
Explore PA Law’s commercial leasing services
Request a commercial lease review
Call 0431 614 696 or email manal@palaw.au.
General information only, not legal advice. Your obligations depend on your documents, circumstances and the applicable law. Obtain advice tailored to your matter before acting.
Video transcript
Your lease ends on Friday. You hand back the keys, walk away—and then receive a bill for $30,000. Why?
Two words: make good. A make-good clause in a commercial lease may require you to remove your entire fit-out, take down signage, repair damage, repaint the premises—or even return it to the condition it was in before you moved in.
Simply saying that the landlord approved the fit-out may not protect you.
Before signing or renewing a commercial lease, find out exactly what you will have to remove, repair and pay for when the lease ends.
Because the cheapest time to negotiate your exit is before you move in—not when you’re trying to move out.