Tips to remember when ending your commercial lease

07/01/2019

None of us ever like the hassle of picking up our things and making a move, especially when there’s an entire business to get on the road. From the packing through to strip-outs and actioning all the cleaning – there’s an endless list of tasks to fill up a to-do list that ends up looking like it will never end.

However, when it’s time for your small business to vacate the premises you have operated from, there are several key things to remember that will help you get on track quickly.

Here is your guide to stripping out your location and getting it back to pristine condition, so you can move onto your next exciting business adventure.

 

‘Make good’ requirements

Like ending a lease on a residential property, you will be expected to return the premises to the same condition as when you took on the lease. These are otherwise known as ‘make good’ requirements and should be clearly listed in your agreement. This is why it’s critical you paid attention when you were reading all that fine print at the start, so it pays to keep on top of your obligations.

‘Make good’ provisions generally include removing all commercial fit outs and fixtures you may have installed during the term of your lease. Additionally, you may need to repair damages, replace carpets and repaint walls to return the premises tothe original condition as well. A proper clean (usually professionally done) is always mandatory.

If you received a property condition report at the start of the lease, use this as your guide to returning the premises to its original state.

Remember, this process can be time-consuming so allow for plenty of time at the end of your lease to complete these works.

 

Make a list

The best way to ensure you return the property to its original state is to make a list of all of the changes you have made during your period of occupancy.

Start at the front door of the premises and walk around in a clockwise direction, noting anything that you altered.

Some of the key things to look out for include: air conditioning and heating, partitions, painting, shop fittings, electrical outlets, floorboards and carpets, data centres or servers, signage, drapes or blinds and commercial fit-outs you may have remaining at the property.

Cross-check this list with the landlord to ensure they are happy with the work you are completing.

 

Features that have improved the property

During your period of occupancy, there are elements of change you may have made that have actually added value to the property. Make sure you speak to your landlord about these additions, as they may be very happy for them to remain.

You may not need to remove an air conditioner that wasn't there to begin with, painting you have done may have improved the aesthetics, and blinds you installed could be doing an effective job of blocking out the sun – so it’s always worth asking.

The rule of thumb: don't do work you may not have to do – check with the landlord first.

 

Cash settlement

In many cases, an arrangement can be made with the landlord for a cash settlement in lieu of ‘make good’ requirements.

This is becoming more common due to time constraints. Many businesses would rather move on quickly while landlords may prefer funds to get professionals in to restore the property to its original condition, rather than the business responsible.

 

What do I do if there is a dispute?

If you cannot come to a reasonable arrangement with your landlord/owner, there are steps you can take.

Each state in Australia has its own version of the Retail Act, which offers ways for disputes to be mediated. If this fails, court action can follow to solve the dispute.

In most instances, though, a reasonable outcome can be reached just by talking to your landlord or through a mediator, if required.