Why is a Make Good an Important Matter to Consider?
A Make Good can be an easily overlooked process for tenants that are moving out. It seems simple at first glance. Isn’t a Make Good just something you have to remember to do at the end of your lease? A promise to leave your premises in good condition for the next tenant that moves in?
Unfortunately no, it’s not. This mistaken assumption is one many business owners make. So having a good Fit Out project manager or a Make Good builder as your Fitout expert is an added protection and a potential cost saver in the long run.
Overlooking the details of your Make Good clause can have ramifications that can cost you thousands of unexpected dollars as you prepare to leave your premises. It sometimes doesn’t end at just removing your office or shop’s fit out when your lease has finished – it can reach much further, into the plumbing, wiring and installation, and can easily make your expenses go into the red.
Where exactly are your Make Good obligations?
Your obligations will be detailed in your retail lease, usually included in a standalone section of your lease (a clause), or contained in another clause containing your other repair and maintenance obligations. However, don’t be confused – even if your Make Good obligations are written in the same place as your other maintenance requirements, Make Good is only applicable to what you’re obliged to do at the end of your lease. This means you only have to meet them when your lease either gets terminated, you surrender your lease, or when your lease expires.
This is where good planning and negotiation can come into play. In the lease offer stage, you have a chance to negotiate your Make Good obligations. Your lawyer can negotiate your make good obligations for you, and get you less strict, more favourable conditions than what your base contract states.
Save Value by Considering Fitout at your Earliest Stages
However, lawyers are not the only relevant source of expert advice at this stage, a good make good builder is also an important element.
In fact, you can start planning for your future expenses in Make Good from the very beginning – through considering the design of your business, and how you’re planning to fitout your premises.
A Make Good can account for more than 10% of the value of the fitout. By keeping Make Good in mind as you design your premises, you can keep your costs down when the time comes to leave.
In our experience, if the quality of the fitout is of a standard high enough, there is a solid chance that the fitout can stay, and there is no need to Make Good at all. This is especially true for spaces such as offices, where the needs between tenants don’t vary too much and the landlord is amenable to keeping your fitout for the next occupant setting up their office.
Therefore, by considering the quality and spacing of your fitouts and installations with a fitout expert or make good builder, they may be able to help you meet your make-good obligations without lifting a finger or additional cost.
Having a Good Fitout Helps Lease Negotiations
Having a good fitout plan can help your lawyer’s negotiations for your lease as a whole. For example, if you planned a minor fitout, this can allow you to agree to stricter Make Good obligations for more leniency, or favourable terms somewhere else in your lease. The reverse is also true: if you know your fitout will be intensive, you might wish to make an extra effort to negotiate something more lenient in your Make Good, or find a way to make your fitout less complicated.
It is important to understand your Make Good clause at all stages of your leasing arrangement, because not only is it a legal requirement, it can take an unexpected chunk out of your future expenses. A well-planned Make Good can avoid unnecessary stress, disputes and expenses when your lease ends.
Stay Ahead by Planning Ahead
If you’re planning a new office, or opening a new business, make sure you’re clear on your Make Good obligations first before jumping in. Understand your obligations and plan ahead accordingly – from the very first step of design and fitouts, so you have an edge on your legal negotiations, as well keeping your costs down for the future.
For more details, or to speak to an expert about your Make Good clause, contact us on 1300 943 588. We’re here to help!
