Lease reinstatement, and what "reinstate to base building" really means

Lease reinstatement is the work of putting leased premises back to the landlord's original standard at the end of a lease. It is the most expensive and most argued-about part of a commercial make good, because it is not just taking things out: it is putting the landlord's things back. This page explains what reinstatement clauses ask for, what the common terms mean, and how to work out your real scope before you pay for it.

General information only, not legal advice. Get advice from a property lawyer about your own lease.

What is the difference between removal and reinstatement?

Think of a make good in two steps.

1. Removal (strip-out). You take out what you installed: partitions, offices, joinery, signs, cabling, racking. See commercial strip-out.
2. Reinstatement. You put back what the landlord originally provided and you removed or changed: ceiling tiles and grid, light fittings, air-conditioning outlets, sprinkler heads, floor finishes, wall linings and paint.

A clause that only says "remove the tenant's fixtures and fittings" may stop at step 1 plus repairs. A clause that says "reinstate" or "return to base building condition" almost always includes step 2.

What does "reinstate to base building" mean?

"Base building" is the standard the landlord delivers before any tenant moves in. In an office tower that usually means an open floor with the building's standard ceiling grid and tiles, standard light fittings, air-conditioning ducts and outlets on a regular layout, fire sprinklers and detectors spaced for an open floor, and painted walls and columns. Many landlords have a written base-building specification. Ask for it: it turns a vague clause into a checklist.

Common terms, from least to most work for the tenant:

These are industry terms, not legal definitions. The NSW Small Business Commission's retail guide notes that cold shell and warm shell terms are sometimes used in shopping centres, where they can mean taking all services back to capped points and installing hoarding when the shopfront is removed. Get the landlord's meaning in writing.

How do you know what "original condition" looked like?

This is where most reinstatement disputes start. Gather:

• The start-of-lease condition report and photos. Victoria's Retail Leases Act does not require one, but both the Victorian and NSW Small Business Commissions recommend agreeing one at the start of a lease, and the NSW guide suggests referring back to it at the end.
• Fit-out approvals and drawings you submitted to the landlord when you moved in. They show what was there before you changed it.
• The base-building specification and any as-built drawings from the building manager.
• Any deed or letter where the landlord agreed you could leave items behind.

If you took over the premises from a previous tenant with their fit-out in place, check whether your lease makes you responsible for removing it. The Victorian Small Business Commission notes that a tenant who buys a business and takes over an existing lease "still ha[s] make good obligations".

What works are usually part of lease reinstatement?

Electrical work must be done by a licensed electrician in both Victoria and NSW. In Victoria some electrical installation work must also be inspected and certified, so ask your electrician for the paperwork. Before ceilings are opened in an older building, check the asbestos register: in Victoria the person managing the workplace must review it before refurbishment or demolition work starts.

What happens if you altered the premises without consent?

Reinstatement becomes much harder to argue about. In Tabcorp Holdings v Bowen Investments (2009), the tenant demolished and rebuilt the foyer without the landlord's consent. The High Court of Australia held that the landlord could recover the cost of reinstating the foyer, not just the drop in the building's value, and said it was "not unreasonable for the Landlord to insist on their payment".

The lesson for tenants: if you changed anything without written approval, expect to put it back, and budget for it.

Can the landlord claim more than reinstatement actually costs?

The landlord's claim and your actual cost can differ, and the law here is technical.

• In NSW, section 133A of the Conveyancing Act 1919, in the wording the High Court quoted in Graham v The Markets Hotel (1943), limits damages for breaching a covenant to leave premises in repair to the drop in value of the landlord's interest. Check the current wording, and how it applies to your clause, with a lawyer.
• We found no equivalent provision in Victoria's Property Law Act 1958, though other rules may apply.
• In Victorian retail leases, the landlord is not responsible for repairing items the tenant is entitled or required to remove at the end of the lease (Retail Leases Act 2003, s 52).
• The NSW guide notes that retail leases often include a clause where a quantity surveyor makes a binding decision on make-good costs if the parties disagree.

If the landlord sends a schedule of works or a cash figure, the practical first step is to get an independent, itemised quote for exactly the same scope so you can see where the numbers differ. For a dispute, talk to a lawyer or your state's Small Business Commission.

How do you scope reinstatement before getting quotes?

1. Copy out the make-good and reinstatement clauses word for word.
2. Ask the landlord, in writing, which standard applies and which items can stay.
3. Walk the space with your condition report and mark every change you made.
4. List each item as remove, reinstate, repair or leave, with a photo.
5. Get quotes against that list, so every contractor prices the same scope.

How MAKE GREAT helps with lease reinstatement

• Analyse my lease. Upload your lease and our lease check highlights the make-good and reinstatement wording and drafts a preliminary list of likely works. It is preliminary, and a person at MAKE GREAT reviews it before you rely on it. It is not legal advice, and a contractor must confirm the scope on site.
• Get my make-good quotes. We send the same structured scope to contractors in our marketplace, so their quotes can be compared line by line.

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.

For the full end-of-lease process, including costs, timelines and getting your security back, read our commercial make good guide. For premises-specific detail, see office make good, retail make good and warehouse make good.

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