What is a make good?

Posted on Posted in Commercial Property, Commercial Real Estate, Leasing, Office

Within a commercial property lease, it will state that you are required to ‘make good’ or ‘yield up’ the property at the end of your tenancy. There is no standard for a make good and each lease can vary. It is crucial that you read the requirements within your lease to determine exactly what your make good liability is, as the works can be expensive for a business and you don’t want to be paying for works that you aren’t required to do.

 

Some of the different make good terms that you will find in your commercial lease are:

  • Back to Base. This is often used by multi storey office buildings and will generally require you to remove all fixtures, fittings and furnishings within the tenancy. This can include all flooring and ceiling tiles, so that the tenancy is returned to a shell.
  • Redecoration. Confirm the definition of redecoration within your lease, as it usually requires you to repaint ‘all painted or finished surfaces’. In some circumstances this can include the exterior of the building! If this is included within your lease you will need to remove all of your items and have the entire tenancy repainted as part of your make good.
  • Fair Wear and Tear. Your lease should state that any make good works exclude ‘fair wear and tear’, so you only need to repair damage that is caused by the Tenant or their employees, contractors, customers etc. Fair wear and tear refers to slight damage that has occurred with the day to day use of the property. For example, worn area on carpet, slight scuff marks on the wall.

 

You will be required to return the property to the condition it was in when you first started the lease, this includes removing any improvements that you have made to the property. For example, if you have installed a new shower and toilet with the Landlord’s approval, you will have to remove this at the end of the lease. You can of course, negotiate with the Landlord for these types of improvements to remain within the property but don’t assume that the Landlord will agree. What the Tenant sees as an improvement may not be seen that way by the Landlord or any future tenants.

 

Before you undertake any make good works, agree on a ‘scope of works’ with the Landlord and ensure that it is inline with what is documented in the lease. If you have agreed the scope of works then there should be no need for any disagreements with the Landlord and you should receive your security deposit back.