End of Lease Make Good Obligations: The Clause Everyone Skims… Until It Hurts
Wendy Nguyen
At the start of a lease, no one really cares about make good.
You’re focused on rent, incentives, fit-outs — the interesting parts. The end of the lease feels a long way off.
Fast forward a few years, and it is the end of your lease and you’re ready to leave.
Your landlord expects the conditions of the premises to be just as it was handed to you, totally normal. But suddenly, there’s a dispute.
That one clause you skimmed becomes the most expensive part of the deal.
It’s not just “clean up and hand back the keys”
Tenants often think make good means a tidy-up and fixing obvious damage.
Landlords often think it means a full strip-out back to a blank shell.
Both can be wrong.
It comes down to wording — and small differences matter:
- “Return to base building condition” usually means a full strip-out (back to shell)
- “Leave in good repair” may only require everything to be functional
That gap in between these two is where disputes live.
Most disputes aren’t about bad behaviour — they’re about assumptions:
- No condition report at the start.
- Vague wording (“good condition” according to who?).
- Tenant only checks the clause weeks before the lease expires.
None of this is unusual. It’s just what happens when this gets left too late.
The law (in practical terms)
There’s no shortcut — the lease governs what the tenant must do.
For retail leases, the Retail Leases Act 2003 (Vic) adds a layer:
- obligations must be properly disclosed upfront; and
- disputes generally go through mediation first.
But it won’t fix a poorly drafted clause.
The part no one plans (but should)
Make good is largely decided at the start of the lease. A few things make all the difference:
- Keep it simple and clear: The more general the wording, the more room for dispute.
- Be clear on the fit-out: What stays, what goes, and what needs to be reinstated.
- A proper starting point: Photos and a signed condition report — otherwise you’re arguing about memory.
- Don’t leave it too late: Make good works take time. If they run over, holding-over rent comes into play or, in some leases, the tenant’s property may become the landlord’s property when the lease expires.
- Demolition clause: If the building is coming down, make good can feel like money spent in the wrong direction.
- Know what you’re inheriting: If you’re taking an assignment of a lease, you’re usually stepping into the make good obligations as they stand. That includes dealing with fit-outs or alterations done by previous tenants — even if you had nothing to do with them.
If you’re near the end of the lease
- Get a pre-vacate inspection done early
- Compare against the starting condition
- Try to agree scope (or a number) upfront
It’s easy to treat make good as another standard clause – it isn’t.
It’s often the biggest end-of-lease cost — and one of the easiest to get wrong.
You can ignore it at the start… but it won’t ignore you at the end.
If your make good clause is suddenly looking more interesting than it did on day one, feel free to reach out to us at nevileco@nevile.com.au or 03 9664 4700.
Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.
