Who Pays for Make Good: Landlord vs Tenant Liability
Make good liability sits with the tenant by default, but the lease wording, not a general rule, decides exactly what and how much. Here is how to work out who pays.
In most Australian commercial leases, the tenant pays for make good. That is the default position because the tenant is the one who altered the space, but exactly what they are liable for, and whether the landlord ever shares the cost, comes down entirely to how the lease is worded. There is no standard meaning across leases, so two tenants in the same building can have very different obligations.
When the tenant is liable
Standard position: the tenant removes their own fit-out, fixtures and fittings, repairs any damage they caused, and redecorates to a commercial standard, all at their own cost. If the clause requires reinstatement to base building condition, the tenant is generally liable for the full strip out, not just the items they added last.
When the landlord may share the cost
- If damage or wear falls under an explicit fair wear and tear carve-out in the lease.
- If the works go beyond what the tenant actually altered (removing base building elements the landlord installed, not the tenant).
- If the landlord approved the tenant's fit-out with a written agreement to keep certain improvements, sometimes landlords prefer to retain a fit-out for the next tenant rather than have it stripped out.
- If assignment or sublease terms shift the make good obligation to a new party under the lease's specific assignment clause.
The wording test
Whenever you are unsure who pays for a specific item, go back to the actual clause and ask: does this describe something I installed, or something that was already there? A dilapidation or entry condition report is the clearest way to settle that question with evidence rather than argument.
Dilapidation report guide ยท Make good clause explained
Frequently asked questions
Does the landlord ever pay for make good?
Rarely for the tenant's own alterations, but yes for anything covered by a fair wear and tear carve-out, or where the landlord has agreed in writing to keep the tenant's fit-out rather than have it removed.
If I sublease my space, who is liable for make good?
This depends on your specific assignment or sublease clause. Read it carefully, or get legal advice, since liability can sit with the original tenant, the subtenant, or both depending on how the lease is drafted.
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Sources: Stonegate Legal, Make Good Obligations in Commercial Leases , Prosper Law, Make Good Obligations in Commercial Leases Explained