Make Good Clause Explained: What Commercial Tenants Are Actually Liable For
A make good clause sets out what a tenant must do before handing back a commercial premises. Here is what it usually covers, the fair wear and tear distinction, and why it is often the most expensive clause in the lease.
A make good clause is a standard part of most Australian commercial leases. It sets out what you, the tenant, must do to the premises before you hand back the keys, and it can require anything from a simple repaint through to removing your entire fit-out and returning the space to base building condition. There is no single standard meaning across leases: the exact wording of your clause decides what you owe, so read it before you assume anything.
The three things a make good clause usually covers
| Obligation | What it typically means |
|---|---|
| Redecoration | Repaint, re-carpet and clean the premises to a good commercial standard. |
| Reinstatement | Remove your fit-out (partitions, cabling, joinery) and return the space to the condition it was in at the start of the lease, or in some clauses, base building condition. |
| Repair | Fix any damage you caused, though most leases exclude fair wear and tear if the clause is drafted to say so. |
Fair wear and tear, the distinction that saves you money
Fair wear and tear is the normal deterioration a premises goes through from ordinary use: faded paint, worn carpet in high-traffic areas, small marks on walls. A tenant whose lease limits their liability to fair wear and tear is generally not required to repaint, replace flooring or undo minor marks caused by reasonable use of the space. Whether your lease protects you this way depends entirely on the wording, and many leases exclude fair wear and tear protection unless the clause is drafted to include it.
Why this is often the most expensive clause in the lease
For many small business tenants, the make good clause turns out to be the single most expensive clause in the whole lease, and most do not realise it is there until the lease is ending. Make good liability is a material contingent cost, and industry legal commentary notes it can end up exceeding the original cost of installing the fit-out in the first place. Get an early cost estimate against your actual clause wording, not a generic average, before you budget your lease exit.
See real cost benchmarks by scope
What tenants are typically asked to do
- Remove all fixtures, fittings, plant and equipment the tenant brought onto the premises.
- Remove internal partitions and walls the tenant installed.
- Make good any damage caused while removing them.
- Redecorate: repaint walls and replace floor coverings to a commercial standard.
- Remove all rubbish and leave the premises clean and tidy.
Frequently asked questions
What does 'make good' mean in a commercial lease?
It means restoring the leased premises to a specified condition, usually the condition at the start of the lease or base building condition, before handing the keys back. The exact scope depends entirely on how your lease defines it.
Can I negotiate my make good clause?
Yes, and the best time is before you sign, not at lease end. Tenants can negotiate narrower reinstatement scope, cost caps, or a jointly appointed quantity surveyor to value the works. See our guide on negotiating a make good clause.
What if my lease does not define fair wear and tear?
Then you are more exposed. Without an explicit fair wear and tear carve-out, a landlord can reasonably argue for full reinstatement to original condition. An entry condition report is your best protection either way.
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Sources: Prosper Law, Make Good Obligations in Commercial Leases Explained , EA Lawyers, What are make good obligations in commercial and retail leases? , Stonegate Legal, Make Good Obligations in Commercial Leases