‘Make Good’ Planning Makes Good Sense For Leased Property
Fortunately, only a few Make Good disputes end up in the Courts. However, the potential for protracted arguments is on the rise.
Some of the drivers include:
- Changing conditions in the resources sector seeing engineering firms and the like, downsize;
- Large corporates relocating to new developments;
- An increasing demand for smaller spaces generally, through improved efficiencies and flexible work environments.
When it comes to handing back tenancy space the Lessee will need to comply with obligations to ‘yield up’. This is typically where the arguments start. Differences of opinion in who owns what; what work needs to be done to return the property to a condition ‘as at commencement’; whether current condition falls under the exception of ‘fair wear and tear’; and whether the extent of partial repair requires full replacement – to mention a few.
Disputes that run beyond the lease term are settled by ‘damages’ – a financial settlement following a claim. These not only include the costs associated with the physical works (typically $200 – $300/sqm for offices) but also legal costs, loss of rent and outgoings.
The good news is that such arguments (and additional costs) can be avoided – through good planning. Continue reading
Lease Make Good – The Break Up
Headaches and protracted negotiations at lease expiry could be avoided by well drafted Make Good clauses and thought out strategy (see Lease Make Good – The Pre Nup).
However, more often than not, the end of term Make Good obligations require negotiation between Landlord and Tenant. This may be in the form of Lease incentives or other commercial considerations negotiated between the Property Manager, Asset Manager and the Tenant directly.
Alternatively, specialist Make Good advice can obtained from Napier & Blakeley.
What We Do – End of Term Claims:
We will discuss the overall asset strategy for the premises. This will consider what the owner ultimately wants from the Make Good process, i.e. a financial settlement, the Tenant to undertake the Make Good works or to use the Make Good figure part of their Lease renewal negotiations.
Undertake a review of the Lease and other tenure documentation prior to inspection, in order to determine and provide advice on the likely Tenant responsibilities. Continue reading
