In Short
- Tenants have the option to renew their lease, but must follow procedures and timelines set out in the agreement.
- Upon lease expiry, tenants must return the premises in the same condition as when they moved in, fulfilling ‘make good’ obligations.
- Clarify time constraints for these obligations with the landlord to avoid disputes.
Tips for Businesses
Before your lease expires, review your rights and obligations. If you plan to vacate, ensure you fulfil your ‘make good’ obligations, such as repairs and cleaning. Be mindful of the timing for these tasks to avoid breaching your lease. Clear communication with your landlord is key to a smooth transition.
Table of Contents
As a tenant, you should clearly understand the leasing process. This is especially true when your current lease agreement nears its end date. In particular, you should make sure that you know what your options and obligations are, as these will vary depending on whether you intend to remain on the premises or return them to the landlord. This article will explain what usually occurs when your lease expires and your available options and relevant obligations.
Leaving the Premises
You have the right to renew your lease when it expires. To do so, you must follow the procedures and timeline specified in the lease, usually 3-6 months before the lease ends. If you do not have the option to renew or choose not to exercise it, you do not need to provide the landlord with a specific time-period notice that you will not be renewing. The agreed-upon lease expiry date is when you must vacate the premises, so you can notify the landlord at any time before that date if you plan to leave. If you do not inform the landlord or indicate your intent to renew, they will assume you will vacate the premises by the lease expiry date.
Make Good
At the end of your lease term, you will generally need to return the premises to the landlord in the condition they were at the start of your lease. This also means it must be in a clean and tidy state. You will most likely need to carry out ‘make good’ obligations. The scope of these obligations can vary depending on what your landlord specifies under your lease. However, this typically involves:
- removing any fitout you have installed;
- repairing any damage;
- redecorating, including repainting any internal walls and replacing carpets or floorboards; and
- restore the premises to their original condition at the start of the lease, including fulfilling all repair and maintenance obligations during the lease term.
However, many leases include a clause that allows the landlord to keep some of the fitout you installed, so you will be required to remove it.
A factsheet that sets out the three ways to end a commercial lease in Australia: surrendering your lease, assigning it or subletting it.
Time Constraints
Leases often include a specific time period in which the landlord expects you to carry out your make good obligations. This will usually be within the last month of the term. It is important not to start this work too early. Doing so could put you in breach of the lease.
If your lease does not clearly outline any time constraints for making good the premises, you should clarify this with the landlord as soon as possible, well before your lease expires. Doing so will help you avoid potential disputes and ensure you meet your obligations under the lease.
Key Takeaways
As your lease expires, you must proactively understand and fulfil your responsibilities. Whether you intend to renew your lease or vacate the premises, being aware of your ‘make good’ obligations, time constraints, and communication with your landlord can help you navigate the process smoothly. By taking these steps, you can ensure a hassle-free transition and leave the premises on good terms, avoiding potential disputes.
If you need assistance understanding your lease, our experienced leasing lawyers can help. As part of our LegalVision membership, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today at 1300 544 755 or visit our membership page.
Frequently Asked Questions
If you choose not to renew, you generally do not need to provide a specific time-period notice to your landlord. The lease’s expiry date is when you are expected to vacate, and you can notify the landlord at any time before that date.
‘Make good’ obligations refer to the requirement to return the premises to its condition at the start of your lease.
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