At the end of a lease term, there are requirements on the Lessee
to "make good" the premises back to a condition that is
agreed within the terms of the Lease, but usually subject to
"fair wear and tear".
Often the "make good" conditions can be extensive and
specific such as:
recarpeting the premises;
removing all partitions and walls installed in the
returning the premises to open plan configuration;
re-positioning the air conditioning ducting to open plan
replacing damaged ceiling tiles and grids;
reinstating the structure of any part of the premises which has
been penetrated or altered by or on behalf of the Lessee.
Whereas at other times, the terms of a lease can be such that
the Lessee is simply required to "make good the premises to
their condition at the commencement date of the Lease, subject to
fair wear and tear".
With this in mind, it is therefore important when you are
entering into a lease as Lessee, or leasing premises as Lessor,
that photos are taken of the condition of the premises. A condition
report should also be completed (usually by the agent) documenting
the agreed state and condition of the premises when the Lessee
This can potentially help save disputes at the expiration of the
Lease if it can show the state of the premises when the Lessee
entered into the Lease.
It is also important to factor into the lease the potential cost
of making good the premises at the expiration of the lease,
particularly if there have been extensive modifications to the
premises by the Lessee (with the Lessor's and other relevant
authorities prior consent). In some instances, the cost of making
good the premises at the end of the lease can run into thousands of
Practically speaking, it may sometimes be possible to agree to
leave items such as air conditioning units or alarms for example
that may benefit a future Lessee, rather than removing them and
making good the premises. However this arrangement would be
strictly at the Lessor's discretion.
Therefore it is advisable that before you enter into a lease as
Lessee or you lease premises as Lessor, that you obtain legal
advice as to either the obligations or requirements of make good
under a lease.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Many retail leases include a covenant to trade, requiring the tenant to open the premises for trade during certain hours.
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