The make good sign-off is the moment a commercial tenancy formally ends and a tenant’s obligations close out. It is a separate event from defit completion, and understanding the difference saves a lot of money at a stage where money is already tight. The defit is when the works get done. Sign-off is when the landlord agrees the works were done properly, closes out the punch list, and signs the letter that releases the bank guarantee or bond. Defit ends when trades leave site. Sign-off ends when the letter arrives.
Tenants who conflate the two find themselves standing on a cleaned-out floor with all their contractors already moved on, waiting on a landlord inspection that has not been booked yet, with a lease expiry running down and holdover rent threatening to kick in. The sign-off conversation rewards the same planning discipline as the defit itself. Handled well, it is a tidy handover. Handled badly, it can hold up a bank guarantee release for weeks or months.
Essential Checkpoints For Final Sign-Off Inspections
The inspection walks the premises against two documents: the lease clause defining make good scope, and the lease-start condition report if one exists. The landlord’s representative, usually a building manager or appointed inspector, works through the space room by room and zone by zone, noting anything that falls short of the required return state.
Most of the checklist is visual. Are partitions removed and the floor made good where they sat. Are ceiling tiles replaced or clean where penetrations came out. Is paintwork reinstated to the original finish where the tenant applied colour. Are services properly capped or reconnected to base building standard. Does the floor covering meet the expected handback condition. Are all tenant fixtures, including shelving, joinery, signage, and bespoke installations, off the floor.
Some items need paperwork rather than a visual check. Fire-rated plasterboard reinstatements need compliance certificates. Electrical isolations need licensed sign-off. Data and comms patching needs documentation from the cabling contractor. Air conditioning rebalance may need a commissioning report if the original system was modified. These are the items that most often hold sign-off up after the physical work is finished.
The inspection is also where the landlord has a chance to raise items the lease does not explicitly cover but the landlord believes falls inside fair wear and tear interpretation. How those items get handled is usually a negotiation, not a strict reading of the clause.
Scheduling And Initiating The Inspection Process
The tenant typically requests the inspection once defit works are complete and the site is presentable. Landlord response times vary, but a 48 to 72-hour lead is reasonable to expect, and some building managers require a week of notice depending on their own schedule. Calling the inspection before the works are actually finished almost always backfires. The inspector walks through, finds a dozen items not yet done, and the next booking is harder to secure.
Timing against lease expiry matters. A sign-off inspection that happens after the lease has expired but before the guarantee is released still works, but it shifts the balance of conversations. The tenant is no longer on the lease, and the landlord’s position can harden. Booking the inspection with several working days of lease remaining is always preferable, and where the timing is tight, a conversation with the landlord early about the inspection window helps.
For tenants running a combined defit-and-relocation, the inspection timing needs to sit inside the broader programme. If the new site has a hard start date and the old site defit is cutting close to lease expiry, the sign-off slot is one of the first things to nail down. The defit phase itself is often underestimated, and the sign-off sits at the tail end of it rather than being a separate later event.
Required Documentation For Landlord Approval
A surprising proportion of sign-off delays come from missing documentation rather than incomplete physical work. The landlord’s inspector expects a small pack of documents, and assembling them late is usually slower than getting the work done.
Typical documents include compliance certificates for any fire-rated reinstatements, electrical sign-off for isolations and disconnections, hydraulic sign-off where plumbing was capped, and HVAC commissioning if any rebalance happened. The contractor who completed each scope is usually the source of each document. Chasing contractors who have already finished their work and moved on is slower than having the paperwork in hand on inspection day.
Photographic records also matter, both as supporting evidence and as defensible proof if the landlord raises issues at sign-off. Photos of the space as handed back, dated and covering each room, are the simplest defence against late-breaking claims about items the tenant believes were completed. A tenant who can produce dated photos showing clean handback of a specific zone is in a much stronger position than one relying on memory.
The lease-start condition report, if one exists, is the other critical document. It defines what “base building” actually meant at the start of the tenancy, which in turn defines what the tenant is obliged to return. Tenants without a condition report are always on a weaker footing, and the sign-off typically defaults toward the cleanest plausible interpretation of base building state.
Managing Punch Lists During Final Sign-Off
Few sign-offs happen in a single event. Most inspections produce a punch list, a short written summary of items the landlord considers incomplete or not to the required standard. The tenant has a window, usually defined in the lease or agreed at inspection, to close out the punch list before sign-off is confirmed.
Punch lists fall into three common shapes. Genuine incomplete items, which were missed or not finished properly, and need remedial work. Arguable items, which the tenant and landlord disagree on as to scope or standard, and which need a negotiation. And finish items, which are minor cosmetic corrections that could have gone either way but the inspector chose to flag. Each shape is handled differently. Incomplete items need trades back on site; arguable items need a conversation; finish items can often be addressed with a half-day of touch-ups.
A tenant walking out of an inspection with a 20-item punch list has usually either missed obvious items or has a landlord running a hard reading of the clause. A 3-to-5 item punch list is common and usually reflects reasonable attention to scope from both sides. Zero punch lists happen, but they are less common than tenants expect, and are usually a sign of either a very clean defit or a landlord happy to close out quickly for commercial reasons.
The punch list is where the difference between a required and negotiable make good item becomes real. A required item goes back on the to-do list. A negotiable item becomes a conversation about what the final state actually needs to be.
Release Mechanics For Bank Guarantees and Bonds
Most NSW commercial leases secure tenant obligations through a bank guarantee rather than a cash bond. The two work differently at sign-off. A cash bond typically sits in a landlord-held account and is released back to the tenant once sign-off is confirmed and any deductions are settled. Mechanics are simple and usually fast: a letter from the landlord to the tenant, and a transfer back.
A bank guarantee is a different instrument. It is issued by the tenant’s bank and held by the landlord as security for the duration of the lease and, typically, for some period past lease expiry. Release of a bank guarantee requires the landlord to return the original document to the issuing bank, which then cancels it and frees up the underlying facility on the tenant’s side. The process has more moving parts, including bank turnaround times on the cancellation, and it can add days or weeks to the close-out timeline even after sign-off is confirmed.
The practical implication is that sign-off does not mean immediate access to the guarantee capital. For tenants whose financing depends on the guarantee being released, factoring in a two-to-four week buffer between sign-off confirmation and actual guarantee cancellation is sensible. Starting the bank-side conversation early, particularly if the bank has its own procedural requirements, prevents a second round of delay after the landlord side is already closed out.
Partial release of a guarantee is sometimes possible if the landlord and tenant agree, and if the bank is cooperative. This is not standard practice, but for large guarantees on drawn-out sign-offs it occasionally makes sense.
Mitigating Common Causes Of Sign-Off Disputes
Sign-off disputes almost always trace back to one of three sources. The first is scope disagreement, where the tenant believed a particular item was outside make good and the landlord believed it was inside. These are usually resolvable through the lease clause itself, supported by the condition report, but where documentation is thin they can drag.
The second is standard disagreement, where both parties accept an item needs doing but disagree on the standard it was done to. Paintwork is a common example. The tenant repainted to a colour they believed matched original, the landlord believes the match is off, and the dispute centres on whether a repaint is warranted. These disputes respond well to bringing in a third-party assessor early, rather than escalating through letter chains.
The third is documentation gaps, where the landlord is unwilling to sign off until specific paperwork is provided. This is the least contentious category but the most frustrating to resolve after the fact. Chasing a contractor for a certificate three weeks after they have invoiced and moved on can take longer than the whole defit did.
Preventing sign-off disputes largely comes down to early engagement with the landlord, an accurate defit scope informed by the original lease clause and condition report, and clean documentation at the point of handback. Tenants who leave sign-off to the last day of the lease almost always pay more in the final resolution than tenants who book the inspection a week early and have buffer to address the punch list.
If you are planning a commercial office defit and want the sign-off to actually close out cleanly, we can help plan the scope, paperwork, and inspection timing alongside the physical works rather than after them.
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