What Are Make Good Obligations?

  November 6, 2023      Construction, Offices, Warehousing

If you’re a commercial tenant, whether that’s in an office, a retail space, hospitality, or something else, you may have heard of “make good obligations.” A make good clause in a commercial tenancy agreement is common and describes how the premises is expected to be left at the end of the commercial lease.

Exactly what specific make good obligations are will vary depending on a lease, but generally speaking they can be as simple as leaving the property clean and tidy all the way up to stripping the it back to the base building; as it was before any sort of building fit-out was installed. The make good clause is in the lease to protect the landlord from any damage done to the building as well as in order to make sure they’re not out of pocket by having to remove and modifications the tenant made.

What’s in the make good of your commercial tenancy will likely depend on what condition the site was in when you started your tenancy:

  • If your location was at base building when you started your tenancy, and you completed your fit-out yourself, it’s likely that your make good obligations are to go back to base building.
  • If your location had a fit-out already, for example with carpeting, a suspended ceiling, etc., and all your business needed to do was bring in furniture, it’s likely you’re only expected to remove your property and leave the premises clean.

Ultimately though, exactly what your make good obligations are will be in your tenancy agreement, and it’s probably something that was negotiated at the beginning of your lease. If you’re not sure, it’s something to keep in mind when negotiating the lease of your new premises.

For example, if your business’ office is relocating, you’ll have make good obligation at your old office. Your new office may be at base building and need a full office fit-out. When negotiating your new lease, make sure to find out what’s expected when you finish that lease; whether the landlord wants to keep the new fit-out or whether you’re expected to remove it.

Also keep in mind that an end of lease make good is more than just removing anything that the tenant added to the building. A lot of things that happen in a make good are also just in line with a business moving locations. There may be some repairs that need to happen, for example. While it may not be part of your make good clause, if you’re moving offices, there may be secure data that needs to be destroyed or recycling of old computers that needs to happen. Then it also needs to be considered what will move to the new location and what will be disposed of.

Can I just pay out my commercial landlord to return the building to its original condition?

The make good clause of some commercial leases allows the tenant to simply pay a lump sum at the end of the lease rather than having to return the site back to its original condition. While this may be convenient and speed up the process of your business relocation, it might not be the best choice because you can usually get the make good done for less money by organising it yourself.

Although this may sound difficult, especially while you’re trying to relocate your business at the same time, organising a make good isn’t that hard at all.

As mentioned, much of the time, make good obligations involve getting a premises back to base building, whether that premises is an office, a restaurant, a shop, or something else. While de-fitting a building takes skill and knowledge, it’s something a professional building company like A1 Precision Solutions can easily do with little input from the client.

This will allow you and your business to concentrate on designing the fit-out of your new building.

Ultimately, we’re here to help. As commercial builders, we can perform make good services as well as help you relocate your business to a new building and also provide fit-out services. This means you can move your business while you only have to work with one supplier, not three. This ensures that your business move will go smoothly, keep the project on time, and keep the budget in line with what’s been quoted.