Make Good Obligations in Queensland Commercial Leases: What Tenants and Landlords Need to Know

Make good obligations are one of the most disputed parts of a Queensland commercial lease. A tenant may think they only need to clean the premises and hand back the keys. A landlord may expect walls, flooring, signage, partitions, cabling, shopfront changes and fit-out works to be removed or reinstated. If the lease is unclear, the end of the lease can quickly become a dispute about cost, timing, evidence and the release of the bond or bank guarantee.

This guide explains what make good means in a Queensland commercial lease, how it differs from repairs and redecoration, what tenants should check before signing, what landlords should document, and how make good disputes are commonly resolved.

If you are approaching the end of a lease, negotiating a lease exit, or facing a make good claim, Ensure Legal can assist with commercial lease make good advice, commercial lease review and lease dispute resolution.

What Does “Make Good” Mean in a Commercial Lease?

A make good clause sets out the condition in which a tenant must return the leased premises at the end of the lease. In practical terms, it may require the tenant to clean, repair, remove fit-out, reinstate alterations, repaint, replace damaged items, or return the premises to a specific condition described in the lease.

The exact obligation depends on the lease wording. Some leases only require the tenant to leave the premises clean and tidy. Others require the tenant to remove all tenant-installed fixtures and return the premises to an open-plan or base-building condition. Some leases allow a negotiated cash settlement instead of physical works.

Key point

Make good is not a standard one-size-fits-all obligation. The lease, entry condition evidence, fit-out approvals, variations, photos, handover records and any end-of-lease agreement all matter.

General Make Good Position in Queensland

For Queensland commercial leases, the Property Law Act 2023 may include standard lease terms dealing with the tenant’s obligation to keep and return the premises in the required condition. However, commercial leases often contain express make good clauses that alter or replace the standard position.

In simple terms, the lease should be reviewed to determine:

• what condition the premises must be returned in;
• whether fair wear and tear is excluded;
• whether structural elements are excluded;
• whether tenant-installed fit-out must be removed;
• whether landlord-approved works still need to be removed;
• whether the tenant can pay a cash settlement instead of completing works;
• whether the landlord can deduct make good costs from the bond or bank guarantee.

Because the wording can vary significantly between leases, tenants and landlords should not rely on a general assumption. The actual legal position must be assessed from the lease and the evidence.

Make Good vs Repairs vs Redecoration

Make good obligations are often confused with repairs and redecoration clauses. They are related, but they are not the same.

This distinction matters because a tenant may be compliant with day-to-day maintenance obligations but still face a major make good obligation at the end of the lease.

Common Make Good Requirements

Make good clauses vary, but they often require one or more of the following:

• removing tenant-installed fixtures, fittings and equipment;
• removing internal partitions, joinery, counters, signage and displays;
• removing flooring, ceiling finishes or specialist fit-out;
• returning the premises to an open-plan layout;
• repairing walls, floors, ceilings, doors, glass and shopfronts;
• making good damage caused by installation or removal works;
• disconnecting or reinstating electrical, hydraulic, air conditioning or fire services;
• deep cleaning the premises before handover;
• returning keys, access cards, manuals and compliance documents;
• settling any agreed cash amount instead of completing physical works.

The main risk for tenants is assuming that landlord-approved fit-out can remain. Consent to install a fit-out does not always mean the tenant is allowed to leave it behind at the end of the lease.

Three Common Types of Make Good Clauses

1. Clean and tidy handover

This is the lightest form of make good obligation. The tenant may only need to remove rubbish, clean the premises, repair tenant-caused damage and return keys. This is more favourable to tenants but should still be confirmed in writing.

2. Repair and repaint obligation

This requires the tenant to return the premises in good repair, sometimes including repainting, replacing damaged flooring, fixing holes and restoring internal finishes. Disputes often arise over fair wear and tear, the standard of workmanship and whether the landlord is demanding improvement rather than repair.

3. Full reinstatement or base-building return

This is the most expensive form of make good obligation. It may require removal of all tenant fit-out and reinstatement to base-building condition. For restaurants, clinics, gyms, salons, offices and retail shops, this can involve substantial demolition, services works and professional contractor costs.

Why Make Good Disputes Happen

Make good disputes commonly arise because the parties do not have the same understanding of the lease exit position.

Common causes include:

• no condition report at the start of the lease;
• poor photos or limited evidence of the original premises condition;
• vague wording such as “return to original condition” without defining what that means;
• landlord-approved fit-out works that are later disputed;
• unclear responsibility for air conditioning, fire services, plumbing or electrical works;
• disagreement over fair wear and tear;
• inflated or unsupported contractor quotes;
• late inspection close to the lease expiry date;
• pressure over the release of a bank guarantee, bond or security deposit.

Many disputes could be avoided if the lease contained a clear make good schedule, entry condition report, approved fit-out plans and a practical exit process.

Condition Reports: The Evidence Problem

The most important evidence in a make good dispute is usually the condition of the premises at the start of the lease. If there is no reliable record, both sides may struggle to prove what needs to be restored.

Useful evidence may include:

• entry condition reports;
• dated photos and videos;
• building plans and fit-out plans;
• landlord consent documents;
• emails approving alterations;
• contractor invoices and practical completion records;
• maintenance records;
• end-of-lease inspection reports;
• make good quotes and competing contractor estimates.

Tenants should collect this evidence before fitting out the premises, not only when the lease is about to end. Landlords should also keep accurate records so that any make good demand can be supported by evidence rather than assumption.

Can the Tenant Negotiate a Cash Settlement?

In many cases, yes. Some leases expressly allow a cash settlement. Even where the lease does not clearly provide for it, the parties may still negotiate a practical commercial outcome.

A cash settlement can be useful where:

• the landlord wants to control the works directly;
• the incoming tenant wants to retain part of the fit-out;
• physical removal is wasteful or commercially unnecessary;
• the cost of full reinstatement is disproportionate;
• the parties want a clean exit and release of security;
• there is limited evidence of the original condition.

Any cash settlement should be documented carefully. The agreement should state what the payment covers, whether it releases the tenant from further make good claims, when the bond or bank guarantee will be released, and whether any rent, outgoings or keys remain outstanding.

Can the Landlord Use the Bank Guarantee or Bond for Make Good?

A landlord may seek to rely on the bond, cash security or bank guarantee if the tenant has not complied with make good obligations. However, the landlord’s right to do so depends on the lease, the security document, the amount claimed, the evidence supporting the claim and whether the proper process has been followed.

Tenants should not ignore a make good demand simply because they disagree with it. Delay may increase risk, especially if the landlord claims ongoing rent, loss of rent, contractor costs or security drawdown rights.

Landlords should also be careful before drawing on security. An unsupported or excessive claim may escalate the dispute and create further legal risk.

Retail Shop Leases: Extra Rules May Apply

If the premises are subject to the Retail Shop Leases Act 1994 (Qld), additional rules may apply. This is particularly important for shops, restaurants, cafes, salons, clinics and other retail-style premises in shopping centres or retail areas.

For example, a retail shop lease clause requiring the tenant to refurbish or refit the shop may be void unless the lease includes sufficient details about the nature, extent and timing of those works. This is why vague refurbishment or refit clauses should be reviewed carefully before signing.

For more information about retail leasing risks, see our Retail Shop Lease Lawyer Queensland service page.

What Tenants Should Check Before Signing

Before signing a commercial lease, tenants should check:

• What exactly does the make good clause require?
• Does the tenant need to remove all fit-out?
• Does the tenant need to reinstate the premises to base-building condition?
• Is fair wear and tear excluded?
• Are structural elements excluded?
• Does the lease attach a condition report or plan?
• Are landlord works and tenant works clearly separated?
• Who is responsible for services such as air conditioning, fire, plumbing and electrical systems?
• Can the landlord require repainting, recarpeting or refurbishment?
• Can the landlord deduct make good costs from the bond or bank guarantee?
• Is there a process for inspection before lease expiry?
• Can the tenant negotiate a cash settlement?

Make good should be negotiated before signing the lease, not only when the lease is ending. For lease review assistance, see our Commercial Lease Review Brisbane service page.

What Landlords Should Document

Landlords should avoid relying on broad statements such as “return the premises to original condition” without proper evidence. A strong make good position usually depends on clear documentation.

Landlords should keep:

• the signed lease and all variations;
• entry condition reports;
• photos and videos taken at lease commencement;
• approved fit-out plans;
• landlord consent documents;
• records of tenant alterations;
• maintenance and repair records;
• inspection reports before lease expiry;
• contractor scopes and quotes;
• correspondence about handover and security release.

A landlord who can clearly show the original condition, approved changes, required works and reasonable cost is usually in a stronger position than a landlord relying only on general dissatisfaction with the premises condition.

Make Good and Repairs and Maintenance

Make good disputes often overlap with repair and maintenance disputes. For example, a tenant may argue that damage is reasonable wear and tear, while a landlord may say it is tenant-caused damage. A landlord may demand replacement of items that were already old or defective at the start of the lease. A tenant may be asked to repair building systems that were never part of the tenant’s fit-out.

Before accepting responsibility, the parties should check the repair clause, maintenance clause, make good clause, condition evidence and any landlord consent documents.

For related issues, see our guide to repairs and maintenance responsibilities in Queensland commercial leases.

What to Do When a Make Good Dispute Arises

If a make good dispute arises, both parties should slow down and build a proper evidence record before taking aggressive steps.

1. Review the lease, special conditions, variations and fit-out approvals.
2. Identify the exact make good obligation.
3. Compare the premises condition at the start and end of the lease.
4. Separate tenant-caused damage from fair wear and tear.
5. Obtain contractor quotes with a clear scope of works.
6. Check whether the landlord’s demand exceeds the lease obligation.
7. Consider whether a cash settlement is commercially better than physical works.
8. Document any agreement about release of bond, bank guarantee, rent and outgoings.
9. Seek legal advice before refusing access, withholding security, drawing on a bank guarantee or commencing proceedings.

If the lease is a retail shop lease, mediation through the Queensland Small Business Commissioner may be relevant before further action. If the matter does not resolve, QCAT or court pathways may need to be considered depending on the type of lease and dispute.

Practical Example: Office Fit-Out

A tenant leases an office and installs glass partitions, workstations, cabling and signage with the landlord’s consent. At the end of the lease, the landlord demands removal of all fit-out and reinstatement to open-plan condition.

The key question is not simply whether the landlord approved the fit-out. The key question is what the lease says about end-of-lease reinstatement. If the lease requires full reinstatement, the tenant may still need to remove approved works. If the lease is unclear, the parties may need to consider the consent documents, fit-out plans, condition evidence and whether a commercial settlement is more practical.

Practical Example: Restaurant Premises

A restaurant tenant installs exhaust systems, grease trap connections, cool room equipment, plumbing changes and commercial kitchen fixtures. At lease expiry, the landlord requires removal and reinstatement of services.

This can become expensive because restaurant fit-outs often involve building services, compliance obligations and specialist contractors. The tenant should check whether the lease distinguishes removable trade fixtures, landlord-owned infrastructure, services reinstatement, damage caused by removal works and any council or certifier requirements.

How Ensure Legal Can Help

Ensure Legal assists landlords, tenants, centre owners, business buyers, business sellers and commercial property investors with make good issues across Queensland.

We can assist with:

• reviewing make good clauses before signing;
• negotiating clearer lease exit obligations;
• advising on fit-out removal and reinstatement obligations;
• reviewing condition reports, plans and handover evidence;
• responding to landlord make good demands;
• advising on bond and bank guarantee disputes;
• negotiating cash settlements;
• preparing or responding to lease dispute correspondence;
• assisting with commercial lease dispute resolution.

For Tenants

We can review your lease before you sign, assess whether a landlord’s make good demand is supported, and help negotiate a clean exit with proper release of security.

Review your lease

For Landlords

We can draft clearer make good clauses, prepare evidence-based demands, respond to tenant disputes and document settlement terms before security is released.

Draft clear lease terms

Frequently Asked Questions

What does make good mean in a commercial lease?

Make good usually means the tenant’s obligation to return the premises at the end of the lease in the condition required by the lease. This may involve cleaning, repairing damage, removing fit-out, reinstating alterations or paying an agreed settlement amount.

Does a tenant always need to remove all fit-out?

No. It depends on the lease wording, fit-out approvals, landlord consent documents and any end-of-lease agreement. Some leases require full removal, while others allow the tenant to leave some or all fit-out behind.

Can a landlord keep the bank guarantee for make good?

It depends on the lease, the security document, the amount claimed and the evidence supporting the make good demand. Both landlords and tenants should obtain advice before taking steps that may escalate the dispute.

What if there was no condition report at the start of the lease?

The dispute may become more evidence-dependent. The parties may need to rely on photos, emails, plans, invoices, witness evidence, maintenance records and contractor reports. Mediation may be useful where the original condition cannot be clearly proven.

Is make good the same as repairs and maintenance?

No. Repairs and maintenance usually apply during the lease term. Make good usually applies when the tenant vacates or the lease ends. However, the issues often overlap, especially where there is damage, fair wear and tear or poor condition evidence.

Can make good be settled by payment instead of physical works?

Yes, in many cases the parties can agree on a cash settlement. Any settlement should be documented clearly and should address release of bond, bank guarantee, rent, outgoings, keys and any future claims.

Do retail shop leases have special rules?

They can. Retail shop leases in Queensland may be affected by the Retail Shop Leases Act 1994, including rules about refurbishment or refit obligations. Retail tenants and landlords should obtain advice before relying on broad or vague refit clauses.

Need Help With Make Good Obligations?

Make good obligations can affect your lease exit, security deposit, bank guarantee, fit-out costs and dispute risk. It is better to clarify your position before the lease ends or before a security dispute escalates.

Contact Ensure Legal for practical advice on Queensland commercial lease make good obligations, lease exits, fit-out reinstatement, bond disputes and commercial lease negotiations.

Contact Ensure Legal

This article is general information only and is not legal advice. Commercial lease obligations depend on the lease wording, the premises condition, the evidence, the type of lease and applicable law. You should obtain legal advice for your specific situation.