NSW Commercial Maintenance: Structural vs. Fit-Out Obligations

Unlike residential properties, which are heavily regulated by statewide "habitability" standards, maintenance and repair obligations in a New South Wales (NSW) commercial lease are defined almost entirely by the negotiated lease contract.

Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Contractual interpretation of terms like "structural" versus "non-structural" drives commercial litigation. Always consult a lawyer. Information last verified: March 2026.

Structural vs. Non-Structural Repairs

Most commercial and retail leases allocate maintenance responsibilities by dividing the building into structural and non-structural components.

The Landlord's Typical Responsibilities

Landlords are generally responsible for maintaining the "base building" and structural integrity. This normally includes:

• The roof, foundations, and load-bearing walls.
• Core capital equipment serving the whole building (e.g., elevators, centralized chiller plants).
• External aesthetic maintenance (often billed back to tenants via Outgoings).

The Tenant's Typical Responsibilities

Tenants are usually responsible for maintaining the interior lettable area and their specific fit-out. This includes:

• Internal non-structural walls, flooring, and paint.
• Servicing and maintaining individual air conditioning (HVAC) units that specifically service their tenancy.
• Grease traps and exhaust hoods (especially in hospitality retail leases).
• General day-to-day cleaning and wear-and-tear mitigation.

"Make Good" Obligations

The most contentious maintenance issue in NSW commercial real estate occurs at the end of the lease, known as the "Make Good".

Commercial leases typically require the tenant to remove all their bespoke fit-out, branding, and equipment, and return the premises to a "base building" condition (often open plan, painted white, with a clean ceiling grid).

This can cost a tenant tens of thousands of dollars. Rather than doing the physical work, tenants and landlords often negotiate a cash settlement, where the tenant pays the landlord out in lieu of stripping the space, allowing the landlord to market the existing fit-out to a new prospect.

Retail Lease Protections for Damage

If a premises is severely damaged (e.g., by a storm, fire, or center-wide electrical failure) and the tenant cannot trade, the Retail Leases Act provides specific statutory protections that supersede the lease contract.

If a retail shop cannot be used due to damage (that the tenant did not deliberately cause):

1. Rent Abatement: The tenant is legally entitled to a reduction in rent and outgoings directly proportionate to the area they cannot use. If the whole shop is unusable, they owe zero rent until it is fixed.
2. Termination Rights: If the landlord cannot or will not repair the damage within a "reasonable time," either the landlord or the tenant can issue a written notice terminating the lease entirely.

If a landlord undertakes major renovations to a shopping center that severely disrupts a retail tenant's foot traffic and trading capability, the tenant may be entitled to claim compensation for business disruption.

Track Make Goods and Fit-Out Contributions

Managing a commercial property means maintaining clear photographic and documented evidence of the property's condition the exact day it was handed over to establish the baseline for the future "Make Good".

Landager allows you to securely store condition reports and track ongoing scheduled HVAC or grease-trap servicing certificates submitted by the tenant, ensuring they are keeping legally compliant with their lease obligations.

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