Schedule of condition and schedule of dilapidations: what tenants need to know

A schedule of condition records the premises before you move in. A schedule of dilapidations is the landlord's list of what you must fix, remove or pay for when you move out. The first is usually the best evidence you have when you check the second.

General information only, not legal advice. Your lease decides what you must do. For advice on your own lease or a landlord's claim, speak to a property lawyer or your state's Small Business Commission.

What is a schedule of condition?

A schedule of condition (also called a condition report) is a dated written record, with photos, of the state of the premises at a point in time. It is usually made just before the tenant takes possession, and sometimes again when a lease is renewed or assigned.

It answers one question for every part of the premises: what was here, and what state was it in?

Is a condition report required in Victoria and NSW?

• Victoria: the Retail Leases Act 2003 has no provision requiring a condition report. The Victorian Small Business Commission (VSBC) recommends that, wherever possible, landlords and tenants agree a condition report at the start of a lease, and that both keep copies of it.
• NSW: the NSW Small Business Commission suggests that, before taking possession, tenants "consider doing an inspection/condition/dilapidation report (including photos)" that both parties sign. Its guide says that at the end of the lease you may be able to refer back to that report.
• Office, industrial and other non-retail leases: check your lease. Some require a condition report and some say nothing.

So in most cases it is a recommendation, not a legal duty, which is why many tenants do not have one.

Why does the schedule of condition decide your make-good bill?

Your make-good clause tells you what condition to return the premises in. The condition report is what shows the starting point.

The report is evidence, not a trump card. Some leases require a standard higher than the starting condition. The VSBC gives the example of a repainting clause that can require a tenant to repaint to a new condition even where the starting condition was poor, "if this is what the tenant has agreed to in the lease". So always read the report together with the clause.

What should a schedule of condition include?

Walk the space room by room and record:

• Date, address, tenancy number and who attended. Both parties should sign.
• Floor plan with each room or zone numbered, so photos can be matched to locations.
• Floors: carpet, vinyl, tiles, polished or sealed concrete, line marking, cracks, stains, drill holes and anchor points.
• Walls and columns: paint colour and finish, holes, damage, signage fixings.
• Ceilings: grid type, missing or stained tiles, bulkheads.
• Lighting: type and number of fittings, any that do not work.
• Air-conditioning: visible units, outlets and grilles, and whether the system works.
• Fire services: sprinkler heads, smoke detectors, exit signs, extinguishers (record what is there, not whether it complies).
• Doors, glazing and locks, including roller doors on industrial sites.
• Kitchens, bathrooms and plumbing fixtures.
• Existing fit-out left by a previous tenant, listed item by item. This is the most argued-about part of many make goods.
• External areas you lease: hardstand, car parks, signage, loading docks.

Take wide photos of each room, close-ups of every defect, and a walk-through video. Keep the original files, and email a copy to the landlord so there is a record they received it.

What if you never had a schedule of condition?

Many tenants do not. You can still rebuild useful evidence:

1. The original leasing listing. Agents' marketing photos and floor plans often show the premises as they were. Search your email for the listing or brochure.
2. Emails and approvals. The landlord's consent to your fit-out often describes what was there and what you were allowed to change.
3. Fit-out drawings and invoices. These show what you added, which tells you, by elimination, what you did not.
4. The previous tenant's records. If you took over a fit-out, ask the landlord for the previous tenant's handover documents.
5. The base-building specification. Many landlords have a written description of the standard ceilings, lighting and services in the building.
6. Your own early photos, such as opening-day pictures.
7. A condition record made now. It cannot prove day one, but it fixes today's condition before any further dispute.

Put all of this in one folder before the landlord's inspection, not after.

What is a schedule of dilapidations?

A schedule of dilapidations is a document, usually prepared for the landlord by a building surveyor, that lists the work the landlord says the tenant must do under the lease. It typically sets out:

• the lease clause relied on for each item,
• the defect or item (for example "remove partitions, reinstate ceiling grid"),
• the remedy the landlord wants, and
• a cost for each item, which may add up to a cash claim.

In Australia you may also see it called a make-good schedule, a schedule of make-good works or a make-good claim. The term "dilapidations" comes from the UK and is used by some Australian surveyors. RICS, a professional body for surveyors, publishes a guide to make good in Australia (Make good Australia, 3rd edition, October 2023).

The schedule is the landlord's claim, not a court order or an independent assessment, so check it.

Dilapidations vs make good: what is the difference?

How do you check a schedule of dilapidations?

Take each item in turn and ask five questions:

1. Does the lease actually require this? Find the clause the item relies on and read it. A clause to "remove tenant fit-out" is not the same as a clause to "reinstate to base building".
2. Was it already like that? Check the condition report, the listing photos and your early records.
3. Is it fair wear and tear? Many clauses exclude it, and the VSBC describes make good as typically covering damage "above fair wear and tear". Our guide to your make-good clause explains how this wording works.
4. Did the landlord approve it, and on what terms? An approval that let an item stay at lease end changes the answer.
5. Is the cost reasonable? Get an independent, itemised quote for exactly the same scope so you can see where the numbers differ.

Be careful with alterations you made without consent. In Tabcorp Holdings v Bowen Investments (2009), the High Court held that a landlord whose tenant rebuilt a foyer without consent could recover the cost of reinstating it, not just the drop in the building's value.

What is a Scott schedule?

A Scott schedule is a table that sets out each disputed item with both parties' positions side by side. It is widely used in building disputes because it turns one large argument into many small ones. A simple version looks like this:

It forces both sides to point to evidence for every item, which often narrows the dispute.

Can a landlord claim more than the work would actually cost?

The law here is technical, and the answer depends on your state, your clause and whether the landlord does the work.

• NSW: section 133A of the Conveyancing Act 1919 limits damages for breach of a covenant to keep or leave premises in repair to the drop in value of the landlord's interest. It allows no damages for failing to leave premises in repair if they would be pulled down, or altered so the repairs become worthless, at or shortly after the lease ends. It deals with repair covenants, so ask a lawyer whether it applies to your clause.
• Victoria: the Property Law Act 1958 has no equivalent provision that we could find, though other rules may apply.
• Retail leases: the NSW Small Business Commission notes that retail leases often include a clause under which a quantity surveyor makes a binding decision on make-good costs if the parties disagree. Check whether yours does.
• Cash instead of works: many tenants and landlords settle by agreeing a payment instead of the works. See make-good payment in lieu.

Where can you go if you cannot agree?

• Victoria, retail leases: any party can refer a retail tenancy dispute to the VSBC for mediation. VCAT can generally hear the dispute only after the VSBC certifies that mediation has failed or is unlikely to resolve it (Retail Leases Act 2003, ss 86 and 87). The VSBC publishes its mediation fees on its website.
• NSW, retail leases: NCAT says mediation is compulsory for most retail lease claims before applying to the tribunal, and claims must generally be made within 3 years after the liability or obligation arose.
• Other leases: the lease and general law apply. A property lawyer can tell you which path fits. See our guide to make-good disputes.

How MAKE GREAT helps

• Analyse my lease. Upload your lease, condition report and the landlord's schedule. Our lease check lines up each make-good obligation with the clause it comes from and flags items that look unclear or that the documents do not establish. It is preliminary, and a person at MAKE GREAT reviews it before you rely on it. It is not legal advice and it does not decide a dispute.
• Get my make-good quotes. We turn the agreed scope into one brief and invite matched contractors from our marketplace to inspect and quote on the same items, so you have independent, itemised prices to compare with the landlord's figures.

You choose the contractor and contract with them directly. MAKE GREAT is a technology marketplace, not a contractor. Free for tenants. If you hire a contractor through us, they pay us a referral fee. Nobody can pay to rank higher. We do not promise that you will save money.

If you are still months from the end of your lease, follow our lease exit timeline. For what reinstatement clauses usually require, see lease reinstatement.

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