The Hidden Cost of Leasing: A Legal Guide to Make Good Duties

Make Good Obligations in Queensland Commercial Leases: What Tenants and Landlords Should Check Before Lease End

Make good obligations are one of the most common sources of commercial lease disputes in Queensland. They are often ignored when the lease is signed, but they can become expensive when the tenant is preparing to move out, sell the business, assign the lease or negotiate a surrender.

A make good clause sets out what condition the tenant must leave the premises in at the end of the lease. Depending on the wording, this may require the tenant to remove fit-out works, repair damage, repaint, recarpet, reinstate walls, remove signage, disconnect services, clean the premises or return the property to a particular condition.

For both landlords and tenants, the key point is simple: make good is not just a cleaning obligation. It is a legal and commercial risk that should be reviewed before the lease is signed, before fit-out works are installed, and well before the lease ends.

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What does “make good” mean in a commercial lease?

In a Queensland commercial lease, “make good” usually refers to the tenant’s obligation to return the leased premises in the condition required by the lease when the lease ends.

The obligation may be narrow or extensive. Some leases only require the tenant to leave the premises clean, tidy and free from damage. Other leases require the tenant to return the premises to its original condition, remove all fit-out works, reinstate base building services, repaint, replace flooring and repair damage caused during the tenancy.

Common make good obligations may include:

• removing internal partitions, counters, shelving, joinery or tenant-installed fixtures;
• removing signage, branding, cabling, equipment and trade fittings;
• repairing damage caused by the tenant, staff, contractors or customers;
• repainting walls, doors, ceilings or shopfront areas;
• replacing damaged carpet, tiles, vinyl or other floor finishes;
• restoring the premises to an open-plan or base building condition;
• cleaning the premises to a professional standard;
• making good penetrations, holes, fixings and alterations;
• returning keys, access cards, remotes and security devices.

The actual obligation depends on the wording of the lease, the condition of the premises at the start of the lease, the tenant’s fit-out works, any landlord approvals, and any later variations or side agreements.

Current Queensland law: Property Law Act 2023 and standard lease terms

Queensland leasing law changed significantly with the commencement of the Property Law Act 2023 (Qld). For commercial leases, the Act includes standard lease terms in Schedule 1, unless those terms are changed or excluded by agreement, subject to the Act and any other applicable legislation.

In practical terms, this means landlords and tenants should not rely on old references to the Property Law Act 1974 (Qld) when reviewing commercial lease obligations. The current framework should be checked against the Property Law Act 2023 (Qld), the signed lease, and any other legislation that applies to the particular lease.

As a general starting point, the standard terms deal with the tenant’s obligation to keep the premises in good condition and to leave the premises in the required condition at the end of the lease. However, many commercial leases contain their own make good clauses. These clauses may modify or replace the default position.

This is why the lease wording is critical. A tenant should not assume that “fair wear and tear” automatically protects them from all end-of-lease costs. A landlord should not assume that the tenant must remove every improvement unless the lease clearly supports that position.

Why make good clauses often cause disputes

Make good disputes usually arise because the parties did not document the starting condition of the premises or did not properly define what the tenant must do at the end of the lease.

Common dispute triggers include:

• no condition report or insufficient photos from the start of the lease;
• unclear wording such as “return to original condition” without identifying what that condition was;
• disagreement over whether an item is tenant fit-out, landlord property or part of the base building;
• uncertainty about whether fair wear and tear is excluded;
• late landlord demands issued shortly before or after lease expiry;
• the tenant removing fit-out that the landlord wanted to keep;
• the tenant leaving fit-out that the landlord expected to be removed;
• disputes over quotes, scope of works, quality of work and timing;
• attempts to deduct make good costs from a bond or bank guarantee.

These disputes can become commercially serious because they often occur when the tenant is already moving business operations, negotiating a new lease, selling a business, or trying to recover a security deposit.

“Original condition” is often the hardest issue

Many leases require the tenant to return the premises to its “original condition”. This phrase can be dangerous if the original condition was never properly recorded.

For example, a tenant may believe that “original condition” means the condition when they first took possession. A landlord may argue it means base building condition before any tenant fit-out was installed. If the lease, plans and condition evidence are unclear, the dispute can become expensive and difficult to resolve.

Before relying on an “original condition” clause, both parties should check:

• the lease commencement condition report;
• photos and videos taken before possession;
• fit-out plans and approvals;
• landlord works documents;
• entry condition records;
• handover emails and agent correspondence;
• lease plans and annexures;
• any deed of variation, licence for works or fit-out approval.

If there is no reliable record of the original condition, negotiation or mediation may be more practical than litigation.

Fit-out removal: should the tenant remove everything?

Not necessarily. Whether the tenant must remove fit-out depends on the lease.

Some leases require the tenant to remove all tenant-installed improvements and reinstate the premises. Others allow the landlord to choose whether certain items must remain or be removed. Some clauses require the landlord to give notice before lease expiry if removal is required.

This can create practical problems. A fit-out may be valuable to the next tenant, but costly to remove. In other cases, the landlord may need a blank tenancy shell so the premises can be re-leased. The lease should state who decides, when the decision must be made, and who pays.

Tenants should check whether the lease requires removal of:

• partitions and office walls;
• shop counters and display units;
• kitchen equipment and exhaust systems;
• plumbing, electrical or data cabling installed for the tenant;
• flooring and ceiling works;
• signage and external branding;
• air-conditioning modifications;
• security systems and access control equipment.

Landlords should check whether they have properly notified the tenant of any required removal works within the timeframe required by the lease.

Retail shop leases: extra care is needed

If the lease is a retail shop lease in Queensland, additional rules may apply under the Retail Shop Leases Act 1994 (Qld). Retail leasing obligations should be reviewed separately from ordinary commercial leases.

One important issue is whether a clause is genuinely a make good obligation, or whether it operates as a refit or refurbishment obligation. In Queensland retail shop leases, refit and refurbishment requirements can be unenforceable unless the lease contains the required details about the nature, extent and timing of the works.

This distinction matters. A landlord cannot simply label a clause as “make good” if, in substance, it imposes a refurbishment obligation that is not properly disclosed or drafted.

For retail shop tenants, it is important to obtain advice before agreeing to expensive end-of-lease works. For landlords and centre owners, the clause should be drafted with enough detail to reduce enforceability risk.

For related advice, see our page on retail shop lease lawyers in Queensland.

What tenants should do before the lease ends

Tenants should not wait until the final week of the lease to deal with make good. By that stage, there may be insufficient time to obtain quotes, negotiate scope, complete works, inspect the premises and resolve any dispute.

Before the lease ends, tenants should:

• review the make good clause and repair obligations carefully;
• check whether the lease requires the landlord to issue a notice specifying works;
• compare the current premises condition with the original condition evidence;
• identify tenant-installed items and landlord-owned items;
• obtain contractor quotes for required works;
• ask the landlord to confirm the required scope in writing;
• negotiate whether a cash settlement is preferable to physical works;
• keep records of all communications, inspections and completed works;
• avoid removing items that the landlord has agreed may remain;
• obtain legal advice before agreeing to a deduction from bond or bank guarantee.

Tenants should also check whether the make good issue affects an assignment of lease, sale of business, option renewal or surrender agreement.

What landlords should do before claiming make good costs

Landlords should approach make good claims carefully. A broad demand without reference to the lease, evidence and actual condition of the premises may be disputed.

Before making a claim, landlords should:

• review the lease wording and any fit-out approvals;
• check whether the lease requires notice before the tenant vacates;
• compare the current condition against the original condition report;
• separate fair wear and tear from tenant-caused damage;
• identify whether items are structural, landlord property or tenant fit-out;
• obtain clear and itemised contractor quotes;
• avoid claiming for upgrades that go beyond the tenant’s obligation;
• keep evidence of inspection reports, photos, invoices and correspondence;
• consider whether a negotiated cash settlement is more commercial than litigation.

If the landlord alleges breach during the lease term and seeks to terminate or re-enter, the landlord should also consider the current notice requirements under the Property Law Act 2023 (Qld), including the proper use of a Form 7 Notice to Remedy Breach where required.

Cash settlement instead of physical make good works

In many cases, the parties may agree to a cash settlement instead of the tenant physically carrying out make good works.

This can be commercially useful where:

• the landlord wants control over the works;
• the tenant has limited time before vacating;
• the next tenant requires different works anyway;
• there is disagreement over the exact scope of make good;
• the parties want a clean settlement and release.

However, any cash settlement should be documented properly. A short email may not be enough. Depending on the circumstances, the parties may need a deed of surrender, settlement deed or written release confirming the agreed amount, what it covers, whether the bond or bank guarantee will be released, and whether either party can make further claims.

Make good, security deposits and bank guarantees

Make good disputes often affect the release of a security deposit or bank guarantee. A landlord may seek to retain security to cover alleged repair or reinstatement costs. A tenant may argue that the landlord is withholding security without proper basis.

Before any deduction is made, the parties should review:

• the security clause in the lease;
• whether the landlord has issued a properly particularised claim;
• whether the tenant has had a reasonable opportunity to carry out works;
• whether the claimed amount is supported by quotes or invoices;
• whether the claimed works are actually required by the lease;
• whether the parties have agreed to a final settlement.

Tenants should not assume the bond will be returned automatically. Landlords should not assume they can deduct broad or unsubstantiated amounts without risk of dispute.

Dispute resolution options in Queensland

If a make good dispute cannot be resolved directly, the appropriate pathway depends on the type of lease and the value of the dispute.

In many commercial and retail leasing disputes, the Queensland Small Business Commissioner may assist with mediation. Retail shop lease disputes may proceed to QCAT if mediation does not resolve the matter. Non-retail commercial lease disputes may need to be dealt with through the courts, depending on the nature and value of the claim.

Before commencing formal proceedings, parties should consider:

• whether the lease contains a dispute resolution clause;
• whether mediation is required or commercially sensible;
• the amount in dispute compared with legal costs;
• the quality of the evidence;
• whether the premises has already been re-let or altered;
• whether urgent relief is needed;
• whether a negotiated settlement will produce a better commercial result.

Make good disputes are often evidence-heavy. Photos, reports, quotes, lease documents and correspondence usually matter more than broad statements about what is “fair”.

Practical checklist before signing a lease

The best time to manage make good risk is before the lease is signed. Tenants and landlords should not treat the make good clause as standard boilerplate.

Before signing, check:

• what condition the premises must be returned in;
• whether the tenant must remove all fit-out or only selected items;
• whether fair wear and tear is excluded;
• whether structural elements are excluded from the tenant’s obligation;
• whether the landlord must issue a make good notice before lease expiry;
• whether the landlord can choose between removal, retention or cash settlement;
• whether the lease includes clear plans and condition evidence;
• whether the clause is appropriate for a retail shop lease;
• how the security deposit or bank guarantee may be used;
• whether the clause affects assignment, surrender or sale of business.

For more general lease review issues, see our guide to commercial lease review in Brisbane.

How Ensure Legal can help

Ensure Legal assists landlords, tenants and business owners with Queensland commercial lease issues, including make good obligations, repair disputes, lease exits, assignments, surrenders and retail shop lease disputes.

We can assist with:

• make good advice and negotiation;
• commercial lease review;
• commercial lease dispute advice;
• Form 7 breach notice advice;
• repairs and maintenance disputes;
• retail shop lease advice;
• deeds of surrender and settlement agreements;
• lease assignment and business sale lease issues.

Facing a make good dispute or preparing to exit a lease?

Speak with Ensure Legal before agreeing to costly works, bond deductions or a final settlement. Early advice can reduce dispute risk and protect your commercial position.

Contact Ensure Legal

Last reviewed: May 2026.

Disclaimer: This article provides general information only and is not legal advice. Make good obligations depend on the specific lease wording, the condition of the premises, the type of lease, the evidence available and the applicable Queensland legislation. You should obtain legal advice before taking action or relying on this information.