Avoid Reinstatement Disputes at the End of a Commercial Lease

One of the easiest ways to avoid reinstatement disputes at the end of a lease is to create a formal portfolio of information on the condition of the space before new tenants move in. For example, you might bring in a building surveyor to create a schedule of condition report.

Here, the surveyor surveys the space. They create a descriptive report that outlines its overall cosmetic and structural condition. They also note down areas of minor damage or concern if there are any.



As well as writing a report, the surveyor will take photos which will go in the final documentation. Some surveyors also produce a video as they make their survey. These photos and videos give you some useful visual evidence to back up the written report — they provide a series of snapshots of how the space looks before your new tenants move in.

While a schedule of condition report gives you some peace of mind that you've created a formal pre-lease picture of the rental space, you should share the report with your prospective tenants. You should give them a chance to check it out for themselves.

The surveyor you use gives an independent assessment; however, your tenants will know that the surveyor works for you. If they can check out the report themselves, then their buy-in increases. They will trust the findings in the report if they agree with them.

Both you and the tenants should then sign the report to formalise your acceptance. A signed document protects both your interests. You both have dated and signed proof that you've seen the report and agreed with its findings.



So, if either of you have problems with make-good or remediation responsibilities at the end of the lease, you can use the report to flash back to original conditions. The report could help either one of you prove your case.

While a schedule of condition report heads off many reinstatement disputes, you might feel that you need extra help at the end of your lease. You can bring back your original surveyor to check the current condition of the property against the initial report.

However, if your tenant has done some work or made some alterations to the space, then you might run into problems even if they agree that they have to do make-good work. You might not agree on the scope of work or its value.

At this stage, both you and your tenant might feel more comfortable if you ask your surveyor to create a reinstatement works report. They can compare pre- and post-tenancy conditions, outline any necessary work and estimate costs. They can even take payment from the tenant on your behalf and organise the work for you if you wish.

To find out more, contact Building & Project Services Pty Ltd. Our services include both schedule of condition and reinstatement work reports. We can help you bring in suitable new tenants without worrying about what will happen at the end of their lease.