If you are moving out of a
shop or office, do you repaint or leave it as is?
Shop leases, office leases and commercial leases generally
have 'make good' covenants which require the tenant to paint
(normally in white), and to repair (to hand-over condition)
the interior of the premises.
The ‘make good’ covenant for painting applies at the end of
each term of the lease. An option term is a new term.
Mostly, it is the tenant's responsibility to repaint, but in
the case of the Albury Townhouse Motel the landlord included
the cost to repaint in the rent and took on the obligation
itself. It's not known why the landlord did so, but the
large amount of face brick on the outside and inside of the
building might provide a hint that there was not much
painting to do.
In any event, the landlord of the Albury Townhouse Motel did
not repaint the Motel at the end of the five year term (it
kept the money instead). The tenant decided to sue the
landlord to recover the cost of the painting so that it
could pay for the painting itself.
The landlord argued all the way up to the Court of Appeal in
the NSW Supreme Court that because the painting had not been
done, the tenant's claim must fail.
The Court of Appeal upheld the tenant's claim and entered
judgment for $54,952.09 plus legal costs, saying that it did
not matter that the painting had not been done.
Applying that finding in reverse, it
is always smarter for a tenant to repaint the premises
before they move out, than face a hefty bill from the
landlord for repainting and making good.
For a full analysis of that decision, click Must
the painting be done before the cost can be recovered under
a decoration covenant in a lease?