The term “make good” is widely used in various industries, including construction, real estate, and retail. It refers to the process of restoring a property or premises to its original condition, usually at the end of a lease or tenancy agreement. In this article, we will delve into the concept of “make good” and explore its significance, benefits, and implications for landlords, tenants, and property managers.
What is Meant by Make Good?
Make good is a clause commonly included in commercial and residential lease agreements. It requires the tenant to return the property to its original condition, reasonable wear and tear excepted, at the end of the lease period. This clause is designed to protect the landlord’s interests and ensure that the property is maintained in good condition.
The make good clause typically includes a list of specific requirements, such as:
- Repairing any damage to the property
- Replacing any missing or damaged fixtures and fittings
- Removing any alterations or additions made by the tenant
- Restoring the property to its original layout and configuration
- Cleaning the property thoroughly
Types of Make Good Clauses
There are two main types of make good clauses:
- Full Repairing and Insuring (FRI) Lease: This type of lease requires the tenant to maintain the property in good condition and repair any damage. The tenant is also responsible for insuring the property against risks such as fire, flood, and theft.
- Non-Full Repairing and Insuring (Non-FRI) Lease: This type of lease requires the tenant to maintain the property in good condition, but the landlord is responsible for insuring the property.
Benefits of Make Good Clauses
Make good clauses offer several benefits to landlords, tenants, and property managers. Some of the key benefits include:
- Protection of the Landlord’s Interests: Make good clauses ensure that the landlord’s property is maintained in good condition and that any damage is repaired.
- Clarity and Certainty: Make good clauses provide clarity and certainty for both landlords and tenants, outlining the responsibilities and obligations of each party.
- Reduced Disputes: Make good clauses can help reduce disputes between landlords and tenants by providing a clear understanding of the tenant’s obligations.
- Increased Property Value: Make good clauses can help maintain the value of the property by ensuring that it is well-maintained and repaired.
Implications for Tenants
Make good clauses can have significant implications for tenants. Some of the key implications include:
- Financial Obligations: Tenants may be required to pay for repairs and maintenance, which can be a significant financial burden.
- Time Constraints: Tenants may be required to complete make good works within a specific timeframe, which can be challenging.
- Penalties for Non-Compliance: Tenants who fail to comply with make good clauses may face penalties, including fines and damages.
Best Practices for Make Good Works
To ensure that make good works are completed efficiently and effectively, landlords, tenants, and property managers should follow best practices. Some of the key best practices include:
- Conducting Regular Inspections: Regular inspections can help identify any damage or maintenance issues, allowing for prompt action to be taken.
- Documenting Make Good Works: Documenting make good works can help provide a clear record of the work completed and any issues that arise.
- Engaging Professional Contractors: Engaging professional contractors can help ensure that make good works are completed to a high standard.
Case Study: Make Good Works in a Commercial Property
A commercial property in a major city was leased to a tenant for a period of five years. The lease agreement included a make good clause, requiring the tenant to return the property to its original condition at the end of the lease period.
During the lease period, the tenant made several alterations to the property, including installing new lighting and flooring. At the end of the lease period, the tenant was required to remove the alterations and restore the property to its original condition.
The tenant engaged a professional contractor to complete the make good works, which included removing the new lighting and flooring and repairing any damage to the property. The works were completed within the specified timeframe, and the property was returned to its original condition.
Conclusion
Make good clauses are an essential component of lease agreements, providing clarity and certainty for landlords, tenants, and property managers. By understanding the concept of make good and following best practices, parties can ensure that make good works are completed efficiently and effectively, maintaining the value of the property and reducing disputes.
In conclusion, make good clauses are a critical aspect of property management, and it is essential to understand the implications and benefits of these clauses. By working together, landlords, tenants, and property managers can ensure that make good works are completed to a high standard, maintaining the value of the property and reducing disputes.
| Make Good Clause | Benefits | Implications for Tenants |
|---|---|---|
| Full Repairing and Insuring (FRI) Lease | Protection of the landlord’s interests, clarity and certainty, reduced disputes | Financial obligations, time constraints, penalties for non-compliance |
| Non-Full Repairing and Insuring (Non-FRI) Lease | Protection of the landlord’s interests, clarity and certainty, reduced disputes | Financial obligations, time constraints, penalties for non-compliance |
By understanding the concept of make good and following best practices, parties can ensure that make good works are completed efficiently and effectively, maintaining the value of the property and reducing disputes.
What is the concept of “Make Good”?
The concept of “Make Good” refers to a provision or clause in a commercial lease agreement that requires the tenant to restore the leased premises to its original condition at the end of the lease term. This provision is also known as a “make good clause” or “restoration clause.” The purpose of this clause is to ensure that the tenant leaves the premises in the same condition as when they first occupied it, minus normal wear and tear.
The make good clause typically outlines the specific requirements for restoring the premises, including the removal of any alterations or improvements made by the tenant, repairing any damage, and cleaning the premises. The clause may also specify the standards for restoration, such as the condition of the walls, floors, and ceilings. By including a make good clause in the lease agreement, the landlord can protect their investment and ensure that the premises are returned in a condition that is suitable for re-leasing or sale.
Why is the “Make Good” clause important?
The “Make Good” clause is important because it provides a clear understanding of the tenant’s obligations regarding the restoration of the leased premises. Without this clause, the tenant may not be aware of their responsibilities, which could lead to disputes and potential legal issues. The clause also provides a level of protection for the landlord, as it ensures that the tenant will restore the premises to its original condition, which can help to maintain the value of the property.
The make good clause can also help to prevent costly disputes between the landlord and tenant. By outlining the specific requirements for restoration, the clause can help to avoid misunderstandings and ensure that both parties are on the same page. Additionally, the clause can provide a clear framework for resolving any disputes that may arise, which can help to reduce the risk of costly litigation.
What are the key components of a “Make Good” clause?
A typical “Make Good” clause includes several key components, including a description of the premises, the tenant’s obligations regarding restoration, and the standards for restoration. The clause may also specify the timeframe for restoration, the procedures for inspecting the premises, and the consequences for failing to comply with the clause.
The clause may also include specific requirements for the removal of any alterations or improvements made by the tenant, such as the removal of partitions, ceilings, or flooring. Additionally, the clause may specify the standards for cleaning the premises, including the removal of any debris or hazardous materials. By including these key components, the make good clause can provide a clear understanding of the tenant’s obligations and help to prevent disputes.
How does the “Make Good” clause affect the tenant?
The “Make Good” clause can have a significant impact on the tenant, as it requires them to restore the leased premises to its original condition at the end of the lease term. This can be a costly and time-consuming process, especially if the tenant has made significant alterations or improvements to the premises. The tenant may need to hire contractors or professionals to perform the restoration work, which can add to the overall cost.
The make good clause can also affect the tenant’s budget and cash flow, as they may need to allocate funds for restoration work. Additionally, the clause may impact the tenant’s ability to sublease or assign the lease, as the tenant may be required to restore the premises before transferring the lease to another party. By understanding the make good clause, the tenant can plan and budget accordingly, and avoid any potential disputes or penalties.
Can the “Make Good” clause be negotiated?
Yes, the “Make Good” clause can be negotiated between the landlord and tenant. The tenant may want to negotiate the terms of the clause, such as the standards for restoration or the timeframe for completion. The tenant may also want to negotiate the cost of restoration, or seek to limit their liability for any damages or defects.
The landlord may also be willing to negotiate the terms of the make good clause, especially if the tenant is willing to commit to a longer lease term or pay a higher rent. By negotiating the clause, both parties can reach a mutually agreeable solution that meets their needs and protects their interests. It’s recommended that both parties seek the advice of a lawyer or real estate expert to ensure that the clause is fair and reasonable.
What are the consequences of not complying with the “Make Good” clause?
If the tenant fails to comply with the “Make Good” clause, they may be liable for any damages or costs incurred by the landlord. The landlord may seek to recover the costs of restoration, which can include the cost of hiring contractors or professionals to perform the work. The tenant may also be liable for any losses or damages suffered by the landlord as a result of the tenant’s failure to comply with the clause.
In addition to financial penalties, the tenant may also face other consequences, such as the termination of the lease or the loss of their security deposit. The landlord may also seek to take possession of the premises, which can lead to further disputes and potential litigation. By understanding the consequences of non-compliance, the tenant can ensure that they meet their obligations and avoid any potential penalties or disputes.
How can the “Make Good” clause be enforced?
The “Make Good” clause can be enforced through various means, including mediation, arbitration, or litigation. If a dispute arises between the landlord and tenant regarding the clause, both parties may agree to mediate or arbitrate the dispute. If the dispute cannot be resolved through mediation or arbitration, the parties may need to litigate the matter in court.
The landlord may also seek to enforce the clause by issuing a notice to the tenant, outlining the specific breaches of the clause and the required remedial action. The landlord may also seek to recover any costs or damages incurred as a result of the tenant’s failure to comply with the clause. By including a clear dispute resolution process in the lease agreement, both parties can ensure that any disputes are resolved quickly and efficiently.