What are defits and makegoods?
Moving your business into a new space often requires extensive changes and renovations to ensure the layout meets your specific needs. However, when you choose to vacate the premises, you will generally be obligated to restore it to the pre-lease state.
Makegoods (also called defits or strip outs) are the process of returning a commercial space back to its original condition. The scope of work involved in a make good will depend on the requirements outlined in your lease agreement. Makegood clauses typically stipulate removing all improvements made during your tenancy, as well as any debris or waste left behind so the space is ready for a new tenant.
Some premises may only need minor repairs and cleaning during the makegood process, while others will require more extensive work, such as repainting, reflooring, or completely gutting the space. Even if you’ve installed a $100,000 fitout in excellent condition, you may still be required to remove it in order to satisfy the make good clause.
