Make-good payment in lieu: should you pay cash instead of doing the works?

A make-good payment in lieu (also called a cash settlement or cash-in-lieu) is money you pay your landlord instead of doing the end-of-lease make-good works yourself. The landlord takes the cash and deals with the premises. It can save time and hassle, especially if you are already moving, but it can also cost more than doing the works if you agree a figure without checking it.

This guide explains when cash settlements happen, how to test the landlord's number, and what to get in writing.

General information only, not legal advice. Talk to a property lawyer before signing any settlement, and to your accountant about GST and tax.

Can you pay instead of doing the make good?

Usually yes, if the landlord agrees. The NSW Small Business Commissioner's NSW Retail Tenancy Guide says tenants "often agree to a payment to the lessor in lieu of the lessee carrying out the make good, leaving it to the lessor to carry out as necessary". We have not found a Victorian or NSW law that governs these payments. They are agreed between the parties, or worked out using a method set in the lease.

There are three common situations:

The NSW guide also says that if tenants do not make good, "they will normally be liable to pay the lessor's costs". Walking away without a deal is rarely the cheap option.

Not sure which situation applies? Read the clause first. Our guide to reading your make-good clause shows where to look and what the wording usually means.

When does a cash settlement make sense?

Cash can suit both sides when:

• The landlord plans to refurbish, redevelop or re-fit the space. The landlord may not want your works done, only to rip them out again.
• The next tenant wants some of your fit-out. Leaving partitions, kitchens or cabling in place can reduce what needs to be removed. Agree exactly which items stay.
• You are short on time. If the lease ends soon and contractors are booked out, a settlement can avoid holding over while works finish. See the lease exit timeline for when to start.
• Your business has already moved and managing contractors in an empty site is a burden.

It is more risky when:

• you have no independent quote, so you cannot tell whether the figure is fair
• the landlord's figure includes items the lease does not require you to do
• the settlement does not clearly end all claims about the condition of the premises
• the payment and the release of your bank guarantee are not tied together

Works or cash: how do the options compare?

Neither option is always better. The right answer depends on your clause, your timeline and the numbers.

How do you check the landlord's make-good figure?

A landlord's estimate is a starting point for negotiation, not a bill. Work through it like this:

1. Ask for an itemised breakdown. A single lump sum cannot be checked. Ask for quantities, rates and who priced it.
2. Get your own quote for exactly the same scope. Give a contractor the landlord's schedule, plus your lease clause, and ask them to price it line by line. A quote for a different scope tells you nothing.
3. Strike out items the lease does not require. Common examples are repairs to normal ageing where the clause excludes fair wear and tear, upgrades beyond the original standard, and items the landlord approved you could leave.
4. Check the standard. Is the figure based on start-of-lease condition, base building or something better? See lease reinstatement for what those standards usually involve.
5. Look for add-ons. Project management fees, consultant fees, contingency or margin may or may not be allowed. Check the lease wording, such as "reasonable" or "actual" costs.
6. Check for double counting. For example, removing a ceiling and also repairing the same ceiling.
7. Compare and negotiate. Put your itemised quote and reasons in writing, and propose a figure.

On cost benchmarks: published make-good cost data in Australia is thin and often dated, so a general $/m² figure is a weak basis for a settlement. A quote for your actual premises is far stronger. Our make-good cost guide explains what public figures exist and their limits.

What limits the amount a landlord can claim?

This area of law is technical, and the answer depends on your state, your lease and the facts. Some points to raise with your lawyer:

• NSW repair covenants. Section 133A of the Conveyancing Act 1919 (NSW) has long limited damages for breach of a covenant to leave premises in repair to the drop in value of the landlord's interest. As quoted by the High Court in Graham v The Markets Hotel (1943), it also said no damages are recoverable for failing to leave premises in repair if they would be pulled down, or structurally altered so the repairs become valueless, at or shortly after the lease ends. The section is aimed at repair covenants, so ask a lawyer to check its current wording and whether it reaches your removal or reinstatement obligations.
• Victoria. We found no equivalent provision in Victoria's Property Law Act 1958, though other rules may apply.
• Unapproved alterations. In Tabcorp Holdings v Bowen Investments (2009), the High Court allowed a landlord to recover the full cost of reinstating works done without consent, not just the loss in value. If you made unapproved changes, expect the landlord to price their full reversal.
• Expert determination. The NSW guide says retail leases often include a clause where a quantity surveyor, nominated by the Australian Institute of Quantity Surveyors or another body, makes a binding decision on make-good costs if the parties disagree. Check whether your lease has one.

If the landlord's redevelopment plans are relevant, ask for evidence of them in writing. That can change the conversation.

What should a make-good settlement agreement include?

Never settle on a handshake or a loose email. Ask your lawyer to document it, usually as a deed or a signed letter agreement. It should cover:

• The amount, whether it includes or excludes GST, and the payment date and method
• What it covers: all make-good, reinstatement, repair, redecoration and cleaning obligations under the lease
• Items left behind: a list of fit-out, fixtures or equipment you may leave, and confirmation the landlord accepts them
• A full release: the landlord releases you, and any guarantors, from further claims about the condition of the premises
• Security: the date your bank guarantee or bond will be returned or released, and that it will not be drawn on for make good
• Handover: the keys, access cards and vacate date, and that no holding-over rent is payable if you leave on that date
• Outgoings and rent: confirmation of any final adjustments, so they are not reopened later

For Victorian retail leases, a landlord holding a cash security deposit must return it within 30 days after the lease ends if you have performed all your obligations (Retail Leases Act 2003 s 24). For NSW retail leases, the NSW guide says the lessor "should release the bank guarantee within two months of the lessee leaving the premises unless they owe money". Tie the return of your security to the settlement in writing.

What if you cannot agree on a figure?

• Retail lease in Victoria: refer the dispute to the Victorian Small Business Commission for mediation. VCAT will generally hear a retail tenancy dispute only once VSBC has certified that mediation has failed or is unlikely to work. As at October 2026, VSBC lists its fee for most commercial disputes as $300 per party for a half day, including GST.
• Retail lease in NSW: NCAT says mediation is compulsory for most retail lease claims before applying to the tribunal. NCAT's monetary limit is $750,000 for leases entered into on or after 1 July 2017 ($400,000 for earlier leases), and you must apply within 3 years after the liability arose.
• Office and industrial leases are often not retail leases. The lease and general law apply, so speak to a property lawyer early.

Whatever the lease type, an independent itemised quote is useful evidence in any negotiation or mediation.

How MAKE GREAT can help

• Get my make-good quotes. Send us your landlord's schedule or your own scope, and we will invite contractors from our marketplace to price the same items, so you have something concrete to compare against the landlord's figure. If fewer than three suitable contractors are available, we tell you.
• Analyse my lease. Our lease check highlights your make-good clause, any "in lieu" or landlord-election wording, and anything unclear. It is preliminary, and a person at MAKE GREAT reviews it before you rely on it. It is not legal advice.

MAKE GREAT is a technology marketplace, not a contractor, law firm or quantity surveyor. We do not negotiate with your landlord for you. You choose and contract with any contractor directly. Free for tenants. If you hire a contractor through us, they pay us a referral fee. Nobody can pay to rank higher. The fee does not apply to a cash settlement you make with your landlord.

General information only, not legal advice. For advice about your own lease or settlement, speak to a property lawyer or your state's Small Business Commission.