For many businesses, signing a commercial lease feels like a fresh start. Energy goes into negotiating rent, choosing a location, and designing the perfect fit-out. Yet when the lease comes to an end — often years later — attention shifts to a very different issue: what condition must the tenant leave the premises in?
This is where make good obligations come into play. Simple phrases in a lease, like “the tenant must return the premises to its original condition,” can translate into disputes, unexpected costs, and in some cases, litigation. For landlords, these clauses are about preserving the value of their property. For tenants, they can determine whether leaving the premises is a routine process or a financial shock.
Why Make Good Matters
Imagine a tenant who has spent heavily fitting out an office — installing partition walls, ceilings, cabling, and customised joinery. From the landlord’s perspective, that fit-out may have little value. The next tenant might want an entirely open-plan space. Unless the lease says otherwise, the landlord can insist on complete reinstatement: stripping out the works and repainting the walls. The tenant, having already invested once to move in, now faces significant costs just to move out.
It is this tension — between protecting the landlord’s investment and limiting the tenant’s exit costs — that makes make good obligations such a contested part of commercial leasing.
The Legal Position
At common law, the starting point is the distinction between fixtures and chattels. Fixtures, once attached to the premises, usually become part of the landlord’s property. Chattels, on the other hand, remain the tenant’s to remove. Without a clear lease provision, a tenant may find that expensive fixtures they installed are deemed to belong to the landlord.
Most commercial leases go further, expressly requiring tenants to remove their fit-out and reinstate the premises. Where the wording is vague — for example, “restore to original condition” — courts may construe the clause against the landlord (the contra proferentem rule). But even so, tenants can be drawn into costly negotiations or disputes if expectations were not managed at the outset.
Common Pitfalls
The most frequent problems arise when:
The clause is vague. Without a clear description of what “original condition” means, both sides can interpret it differently.
No condition report exists. Without photos or a schedule from lease commencement, it becomes a battle of recollection.
Costs are underestimated. Tenants are sometimes shocked to discover they must remove ceilings, flooring, or air conditioning units — not just furniture.
Negotiating Alternatives
Because of these risks, many parties now prefer to negotiate alternatives at the start of the lease rather than leave it to chance at the end. Some landlords are content with a “leave as is” arrangement, particularly if the outgoing fit-out may suit a future tenant. Another option is a specific scope clause — for example, requiring the tenant to repaint, remove signage, and steam clean carpets, or whatever the parties agree to, but nothing more.
Each of these approaches gives both sides certainty and avoids last-minute disputes.
Practical Guidance
For tenants: Think about make good at the beginning, not the end. Obtain a detailed condition report when you move in, and negotiate clear limits on reinstatement. Always budget for the exit.
For landlords: Ensure clauses are drafted with precision. If the expectation is that tenants will strip out their fit-out, say so. If the fit-out is likely to add value, consider whether requiring reinstatement is commercially sensible.
Conclusion
Make good obligations are one of the most deceptively simple parts of a commercial lease. On paper, they may appear as a single line tucked away at the back of the document. In practice, they can become the most expensive and contentious obligation a tenant will face.
Handled well, make good provisions provide clarity and fairness. Handled poorly, they can leave one party out of pocket and both sides in dispute. That is why landlords and tenants alike should treat make good not as an afterthought, but as a central part of commercial lease negotiations.
If you’re reviewing your obligations under a commercial lease, our related guides offer further insight into key lease-components that often go hand-in-hand with make-good clauses:
Together, these guides will deepen your understanding of how make-good obligations fit into the broader commercial leasing framework and help you negotiate more effectively.
Make good provisions in commercial leases - we can help
At Thornton + King we have prepared and reviewed hundreds of commercial leases. Our lawyers have decades of experience in preparing, reviewing, and negotiating make good clauses. Our team includes multiple Law Society Accredited Specialists in Property Law. To speaking to a specialist commercial leasing lawyer, give us a call or submit an enquiry now.
