Short Story Series: Make Good Clause in Commercial Leases, Hidden Costs Explained

Karunn Shahani

Principal Lawyer and Managing Director

The $180,000 Exit Bill Hidden in a Commercial Lease: The Situation

The lease ended.
The business was done.

My client thought they were finished too.

They weren’t.

The Problem: The Make-Good Clause

Buried deep in the lease was a make-good clause.

It required the premises to be returned to base building condition.

That meant removing everything added during the tenancy:

  • Fixtures

  • Partition walls

  • Fit-out elements installed over six years

What “Make-Good” Actually Cost

The costs escalated quickly:

  • Demolition and removal

  • Disposal and waste

  • Structural repairs to walls and floors

  • Electrical and mechanical reinstatement

  • Contractor margin

Total: $180,000

  • Not budgeted

  • Not insured

  • Payable before the bond was released

Where It Went Wrong

The clause:

  • Was only four lines long

  • Sat on page 38 of a 61-page lease

It had been signed six years earlier, without legal review.

At the time:

  • The premises suited the business perfectly

  • The agent said the lease was “standard”

The Reality of “Standard” Leases

There’s no such thing as a truly “standard” lease.

  • “Standard” leases are drafted to protect landlords

  • They don’t consider your specific business or exit risk

  • Key obligations are often hidden in plain sight

Why Legal Review Matters

A specialist property lawyer doesn’t just read the lease — they:

  • Identify hidden risks like make-good obligations

  • Negotiate more favourable terms

  • Align the lease with your business model and exit strategy

The Takeaway

If You’re Signing a Commercial Lease, Get It Reviewed First

Not after:

  • Six years of trading

  • When you’re exiting

  • When the bill lands

Because the make-good clause:

  • Won’t feel real on day one

  • But it will feel very real on the last day

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