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
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