Navigating Commercial Lease Make-Good Clauses and Director Guarantees

Summary

Commercial tenants facing lease expiry are bound by make-good clauses to return properties to their original condition. Decommissioning specialized fit-outs, such as cool rooms, can incur heavy costs that exceed the security deposit. If a tenant fails to perform the work, landlords may forfeit the security bond and pursue additional losses against personal assets if a director guarantee was signed. Consulting legal counsel and property managers early helps mitigate liability.

Key Points

Why it matters: Commercial lease end-of-tenancy make-good requirements carry significant financial risk, making a clear understanding of lease terms essential to avoid legal disputes and bond forfeiture.

Commercial tenants facing lease expiry are bound by make-good clauses to return properties to their original condition. Decommissioning specialized fit-outs, such as cool rooms, can incur heavy costs that exceed the security deposit. If a tenant fails to perform the work, landlords may forfeit the security bond and pursue additional losses against personal assets if a director guarantee was signed. Consulting legal counsel and property managers early helps mitigate liability.

Practical Takeaway

Use this note as a practical prompt before making decisions. Check the rules in your state, keep written records, and seek qualified advice where needed.