The final months of a commercial lease often bring an unwelcome surprise: a make good clause that requires the tenant to restore the premises to their original condition before handing back the keys. What seemed like a straightforward exit can become a dispute over strip-outs, repairs and compensation, sometimes worth tens of thousands of dollars. For tenants in Ipswich, Springfield and across Greater Queensland, understanding the make good obligation before it falls due is far less costly than negotiating it under pressure at lease end.
A make good obligation is a contractual requirement, set out in the lease, for the outgoing tenant to return the premises in a specified condition. The standard position under Queensland's Property Law Act 2023 is that a tenant returns the premises in the same or better condition as at the start of the lease, excluding reasonable wear and tear and insured or specified disaster damage, according to the Queensland Small Business Commissioner. Importantly, the parties may agree different make good terms, and those agreed terms then replace the standard position entirely.
As a Springfield law firm, we help clients across Greater Springfield and Ipswich with commercial lease reviews and make good disputes.
Here is how make good obligations generally work in Queensland, and what the timing means for a tenant who is approaching the end of a lease.
Key takeaways
- Queensland's Property Law Act 2023 sets the default make good standard.
- Retail tenants cannot be required to refurbish or refit unless the lease gives details.
- Disputes up to $750,000 in value can be mediated through the Queensland Small Business Commissioner.
This article is general information only and is not legal advice. Every situation is different, and you should speak with a solicitor about your own circumstances.
What does a make good obligation actually require in Queensland?
A make good obligation generally requires a tenant to return the leased premises in the condition the lease specifies, which commonly means removing the tenant's fit-out, restoring the space to its pre-tenancy state and leaving it clean, according to the Queensland Small Business Commissioner. The standard position under the Property Law Act 2023 is the same or better condition as at the start, excluding reasonable wear and tear and damage covered by insurance or specifically excluded in the lease. Where the lease says something different, those agreed terms apply instead.
Common make good tasks named by the Commissioner include repairing any damage caused during the tenancy, removing partitions and other tenant-installed fit-out, restoring the base building services such as electrical and plumbing to their original configuration, returning the space to an open plan layout and leaving the premises clean. The scope of work depends entirely on what the lease says, which is why the lease wording matters most.
Disputes typically arise where condition reports were not prepared at the start of the tenancy, where the lease clause is vague about what must be removed, about the quality of repair expected, or about who pays for improvements the landlord wants to keep.
When does the make good obligation arise, and what happens if the tenant delays?
The make good obligation falls due at the end of the lease term, whether that is after a fixed period, at the expiry of an option or on early termination. A tenant who does not carry out the required work before handing back the keys leaves the landlord with a claim for the cost of completing it, and potentially for loss of rent during the period the work takes place. Where the lease treats time as important, delay can become expensive quickly.
A key timing risk arises with the security deposit or bank guarantee the tenant provided at the start. The landlord generally holds that security until the make good obligation is satisfied and any dispute is resolved, according to the Queensland Small Business Commissioner. A tenant who hands back the keys without completing the work should expect that security to be applied against the landlord's claim, which may not cover the full cost.
The Queensland Small Business Commissioner notes that disputes about make good are common, often because the bond or security is caught in the middle, with both sides disagreeing about what was agreed and what the condition report, if any, shows.
What are the specific rules for retail shop leases in Queensland?
Retail shop leases in Queensland carry a stronger protection for tenants on refurbishment, according to the Queensland Small Business Commissioner. Under the Retail Shop Leases Act, a clause that requires a retail tenant to refurbish or refit the premises is void unless the lease gives general details of the nature, extent and timing of the required work. A clause that simply says "the tenant must refurbish" without any further detail is unenforceable in a retail context.
This does not remove the make good obligation for retail tenants. It means that a landlord cannot use a vague refurbishment clause to require costly cosmetic work at the end of the lease if the clause does not meet the Act's requirements.
Key retail lease rules on make good, according to the Queensland Small Business Commissioner:
- › Refurbishment clause: void unless the lease details the nature, extent and timing of the work.
- › Standard make good: still applies; the retail tenant must return the premises in the condition the lease requires.
- › Size threshold: the retail shop lease regime generally applies where the leased area is under 1,000 square metres and used for a retail business, or for any business in a retail shopping centre.
- › Dispute resolution: retail shop lease disputes, including make good disputes, can go to the Queensland Small Business Commissioner for mediation and to QCAT for arbitration.
How does a solicitor help with a make good dispute in Queensland?
Step 1: Talk to us
Get in touch and we will explain how the make good process generally works and what the lease requires at the end of the tenancy.
Step 2: Review the lease and condition evidence
We review the make good clause, the original condition report and any photographs taken at the start of the tenancy, to establish what was agreed and what the premises looked like before the fit-out was installed.
Step 3: Negotiate a cash settlement or scope of works
Where the parties disagree about the extent of the obligation, we assist in negotiating a cash settlement in lieu of physical works, or a defined scope of works that both sides accept, which is often a faster and more cost-effective outcome than full strip-out and restoration.
Step 4: Represent the client in mediation if needed
If the dispute cannot be resolved by negotiation, we assist the client through the Queensland Small Business Commissioner's mediation process, which handles make good disputes up to $750,000 in value, according to the Commissioner.
| Get in touch Need help with a commercial lease or make good dispute? We're an experienced team who keep you well informed at every stage of the process. Get in touch to discuss your needs. |
What are the most common make good mistakes Queensland tenants make?
The most common problem the Queensland Small Business Commissioner sees in make good disputes is the absence of a condition report at the start of the tenancy. Without one, both sides are left arguing about the original state of the premises from memory, photographs that may be incomplete or emails that do not clearly describe the condition. A detailed, signed condition report prepared before the tenant takes possession is the single most important document in any make good dispute.
A second common mistake is assuming that the security deposit will cover any shortfall in the make good works. The bond is generally held until the obligation is satisfied, according to the Commissioner. A tenant who hands back a partially restored premises and expects the deposit to settle the difference may find that the landlord's claim exceeds what the security covers, leaving a debt to pursue.
"The make good clause is one of the most negotiated terms in a Queensland commercial lease, and one of the most disputed at the end. Knowing what it requires before signing, and having a condition report at the start, avoids most of the problems we see."
Jade Kickbusch, Principal, Brookwater Legal
When does make good not apply, or apply differently, in Queensland?
The make good obligation does not apply in the same way in every lease. Where the parties have agreed that the tenant may keep a fit-out in place, or that the landlord will take over specific improvements, those agreed terms replace the default position under the Property Law Act 2023, according to the Queensland Small Business Commissioner. In that situation the tenant may have no obligation to remove those items at all.
A lease may also exclude certain types of damage from the make good obligation, for example damage caused by an insured event such as a storm or fire. Where the lease sets out a list of excluded events, the tenant is generally not required to restore damage of that kind.
There are also situations where the make good obligation is effectively negotiated away as part of a surrender or early exit arrangement. Where a tenant and landlord agree to end the lease before its expiry, the terms of the surrender, including any make good component, are matters for negotiation under the Property Law Act 2023, according to the Queensland Small Business Commissioner.
Frequently Asked Questions
What is the standard make good obligation under Queensland law?
The default position under Queensland's Property Law Act 2023, as set out by the Queensland Small Business Commissioner, is that a tenant returns the premises in the same or better condition as at the start, excluding reasonable wear and tear and insured or specified disaster damage. Where the lease says otherwise, those agreed terms apply instead.
Can a Queensland landlord require a tenant to fully refurbish the premises at lease end?
For retail shop leases in Queensland, a refurbishment or refit clause is void unless the lease gives general details of the nature, extent and timing of the work, according to the Queensland Small Business Commissioner. For non-retail leases, the terms of the lease govern and there is no equivalent statutory restriction.
What happens to the security deposit if a tenant does not complete the make good works in Queensland?
The security is generally held until the make good obligation is satisfied and any dispute is resolved, according to the Queensland Small Business Commissioner. Where the works are incomplete, the landlord may apply the security against the cost of completing them, and any shortfall may be pursued as a debt.
Can a tenant pay a cash settlement instead of physically making good in Queensland?
A cash settlement in lieu of physical works is a recognised option in Queensland, according to the Queensland Small Business Commissioner. It requires both parties to agree, and the amount is a matter of negotiation based on the scope of what the lease actually requires.
Where are make good disputes resolved in Queensland?
The Queensland Small Business Commissioner offers low-cost confidential mediation for make good disputes up to $750,000 in value. QCAT can arbitrate retail shop lease disputes. For higher-value or non-retail disputes, the courts have jurisdiction, with the Magistrates Court handling claims up to $150,000 and the District Court up to $750,000.
Do you need a solicitor for a make good dispute in Springfield or Ipswich QLD?
A solicitor can review the lease, assess what the make good clause actually requires, and help negotiate a resolution before the dispute escalates to formal proceedings. Our conveyancing team assists commercial tenants and landlords across Greater Springfield and Ipswich with lease-end matters.
Does the make good obligation apply if the Queensland lease is surrendered early?
Where a lease is surrendered by agreement, the make good component is a matter for negotiation as part of the surrender terms, according to the Queensland Small Business Commissioner. The surrendering tenant may still be required to carry out some or all of the make good works unless the parties agree otherwise in writing.
Your Next Steps
Make good obligations are one of the most frequently contested aspects of a commercial lease in Queensland, and the cost of getting it wrong falls almost entirely on the tenant who leaves without a clear picture of what the lease requires. For tenants in Springfield and Ipswich, the time to understand the obligation is before it falls due, ideally when the lease is first reviewed and again as the end of the term approaches.
If you're working through a make good obligation at the end of a lease, the right advice early makes the process simpler. Contact the Brookwater Legal team or call (07) 3437 8555 to talk through where you stand.
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External Resources
- Queensland Small Business Commissioner - Make good
- Queensland Small Business Commissioner - Commercial lease bond
- Queensland Small Business Commissioner - Ending a lease early
- Queensland Small Business Commissioner - What is a retail shop lease in Queensland
- Queensland Legislation - Retail Shop Leases Act 1994
Brookwater Legal · This article contains general information only and does not constitute legal advice. It does not take into account your individual circumstances. You should obtain legal advice about your own situation before acting on anything in this article. Liability limited by a scheme approved under Professional Standards Legislation.
