The defit scope a property manager issues at lease end is the document that decides whether the next tenancy in the floor starts cleanly or starts with arguments. Issued well, it sets a clear expectation for the outgoing tenant, gives the incoming tenant a baseline to work against, and leaves the building manager with a vacant tenancy that is ready to re-let. Issued badly, it sits on the wrong side of every later negotiation and quietly builds up scope creep that costs the landlord at re-letting time.
This is not a tenant-facing scope. The reader here is the property manager or asset manager preparing the schedule the outgoing tenant has to deliver against. The drafting decisions made at this stage shape the rest of the lease-end process for everyone involved.
What The Schedule Is And What It Is Not
The defit scope between tenancies is the document that tells the outgoing tenant what works are required to hand the tenancy back, against what reference condition, by what deadline. It typically rolls up two related instruments: the dilapidation schedule, which lists the items requiring attention and references them against the lease and the original condition document, and the practical works schedule, which sequences and dates the works themselves.
It is not a quote, a contract, or a position the landlord cannot vary. It is the opening scope against which the tenant responds, the trades price, and the joint walk-through tests. A schedule that recognises this upfront usually produces faster sign-off than one that reads as a take-it-or-leave-it instruction.
The Reference Condition Has To Be Defensible
Every item on the schedule has to be anchored to a reference condition. For NSW commercial leases, that anchor is typically the schedule of condition or condition report agreed near lease commencement, plus the photographic record that accompanied it.
Where the original condition document is thin or missing, the scope still gets issued, but the property manager’s position is weaker. Items that cannot be specifically referenced to a baseline condition are negotiating positions rather than entitlements. A schedule that lists ten items, eight of which reference back to specific photographs in the lease commencement file, will hold up better than a schedule with twenty items where only two reference the file.
The practical implication is that a property manager who inherits a tenancy with weak commencement documentation should scope conservatively at exit. Dilapidation schedules are tested first against the lease clause and second against the documentation. Where documentation is the weakness, the schedule has to be careful.
What To Include And What To Leave Off
Three categories of items belong on a defit scope between tenancies. Tenant alterations that the lease requires removed. Damage caused by the tenant beyond fair wear and tear. And reinstatement of finishes or services that the tenancy was contracted to return to a specified condition.
Items that should not appear on the schedule include base building deterioration, prior-tenant alterations that the current tenant did not install, items already accepted in writing as staying, and general aging that the lease does not specifically require reinstating.
The cleanest test for inclusion is whether the lease and the commencement document together support the line item. Where they do, it belongs on the schedule. Where they do not, it is either a negotiating ask that should be framed as one or an item that the landlord absorbs at re-letting cost.
Scope Granularity And How It Affects Quoting
A schedule written in broad strokes invites broad quotes. “Remove all tenant alterations and reinstate to commencement condition” produces price variation across trades that the outgoing tenant cannot reasonably reconcile, and that the property manager cannot reasonably defend at sign-off.
A schedule written with specific items, locations, and conditions produces comparable quotes. “Remove the partition wall between meeting rooms 1 and 2 (approximately 4 linear metres, single-stud, plasterboard both sides), patch ceiling tile at the partition line, replace carpet tiles within 200mm of the partition line to match existing, repaint adjacent walls to nearest natural break” gives every trade the same scope to price and gives the property manager a defensible position at the walk-through.
The schedule does not have to read as a construction specification, but the granularity of the description has to be enough that two competent trades price within a sensible range of each other. The drivers that move make-good cost are mostly variables that the schedule can control through careful wording.
The Programme And The Hand-Back Date
The schedule needs a programme. The lease end date is the latest possible hand-back date, but the practical hand-back usually wants to land earlier to allow for the joint walk-through, any rectification works, and final sign-off before the lease formally expires.
A defensible programme typically runs the dilapidation schedule issuance at six to nine months before lease end, the tenant’s response within four to six weeks of issuance, the joint walk-through at thirty to sixty days before exit, the physical works programmed against the walk-through outputs, and the final inspection within a week of practical completion. The joint walk-through sits at the middle of this and is where most scope variation is resolved.
Where the schedule states a hand-back date inside the lease end date, the tenant has a clear target and the landlord has time to absorb minor slippage without it becoming a holdover situation.
What Sits Inside The Schedule Document Itself
A useful defit schedule between tenancies includes a cover letter or summary explaining the basis and timing, the dilapidation list with each item referenced against the lease clause and commencement document, photographs or floor plan markings where they help locate items, a practical works schedule with sequencing notes, and a contact register for the property manager, building manager, and any landlord-side specialists.
It does not need to be long. A focused schedule on a typical Sydney commercial floor usually sits between fifteen and forty pages depending on size and complexity. Schedules that grow much beyond that are usually either over-scoped, over-documented, or both, and they tend to slow the process down rather than tighten it.
Coordination With The Building Manager
The property manager runs the lease relationship but the building manager runs the floor’s practical access. The defit scope has to align with what the building manager will allow in terms of after-hours access, lift bookings, dock use, and waste removal. A schedule that sets a programme the building cannot accommodate creates conflict for the outgoing tenant that the property manager is then asked to resolve.
Pre-issuance coordination with the building manager is worth the time. Confirming dock access windows, after-hours rules, and any concurrent works in adjacent tenancies before the schedule is issued usually produces a programme that holds. Issuing the schedule first and then discovering access constraints afterwards usually produces a programme that has to be reworked under time pressure.
Re-Letting Readiness And What Falls Outside The Schedule
The outgoing defit returns the tenancy to a condition. Re-letting readiness, including the marketing condition the landlord wants for the next tenancy, is a separate scope. The schedule should be clear about where the line sits.
Items that belong on the defit schedule include tenant alterations to be removed and tenant damage to be remedied. Items that belong on a separate re-letting scope include any refreshes the landlord wants to do at their cost to make the tenancy more marketable, any base building works that have come due, and any condition improvements that go beyond the lease’s reinstatement standard. Temporary make good arrangements sometimes sit in this space, where the landlord accepts a reduced defit in exchange for taking on more of the re-letting refresh themselves.
Keeping these two scopes separate in the documentation protects everyone. The outgoing tenant pays for what the lease requires. The landlord pays for what the next tenancy needs beyond that. Mixing them produces arguments at sign-off and slows down both the bond release and the re-letting process.
What A Strong Schedule Looks Like At Sign-Off
By the time the joint walk-through arrives, a well-issued schedule should have already done most of the negotiating work. The outgoing tenant has responded in writing to each item. The trade quotes are in range. The programme is agreed with the building manager. The walk-through itself is mostly confirmation and a handful of last-minute resolutions, not a renegotiation of the scope.
A schedule that arrives at the walk-through with most items still contested means the property manager and the tenant are about to redo work that should have happened weeks earlier. That is usually a failure of the document, not of the tenant.
If we can help draft a defit scope for a Sydney commercial tenancy ahead of lease end, review an existing schedule before it goes out, or run the practical defit and make good works against the issued schedule once the tenant’s response is in, we work both sides of these scopes regularly and can assist whichever side of the lease you sit on.
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