Commercial Condition Reports support ‘Make Good’ clauses

At Asset Reports, we understand the importance of commercial lease agreements and the potential disputes that can arise during their duration. One area where disagreements can often occur is regarding the condition of the property before and after the lease term. This is where a Commercial Condition Report (PCR) can be an invaluable tool.

A PCR provides both written and photographic evidence showing the condition of the property before being occupied by a new tenant. This can bring transparency and objectivity to the situation, which is particularly important in long-term leases where the property manager may change several times during the course of the lease. With a PCR, there is an objective record of the property's condition that exists long after property managers and business owners move on.

Approved and unapproved alterations to the property can also become a point of contention between the property owner and tenant. Adding or removing walls and partitions in offices, mezzanine floors in warehouses, and gantry cranes and hoisting systems are just a few examples of alterations that may be made by tenants during the lease term. Additionally, damage caused by tenants during the lease, such as oil stains, damage to walls and doors, vehicles hitting external walls and structures, and abandoned items left at the property (start or end of lease), can also be a source of dispute.

This is where 'Make Good' clauses come into play. A 'Make Good' clause is a standard clause found in commercial lease agreements that outlines the tenant's obligation to return the premises to the standard and configuration they were in prior to the commencement of the lease. This includes reinstating any part of the premises that has been altered by the tenant, repairing any damage caused by the tenant, and removing all tenant's property. However, without a baseline, these requirements can be very subjective and lead to disagreements.

This is why having a Commercial Condition Report can provide clarity and objectivity to the situation. A PCR can serve as a reliable reference point for all parties involved and can help prevent disputes from arising. Additionally, documented written and photographic evidence provides an additional layer of protection for all parties. Photos, videos, and 3D virtual tours allow you to go back in time prior to the tenant taking possession of the premise, providing an objective record of the property's condition.

At Asset Reports, we provide accurate and reliable property reporting services to help property managers and business owners navigate the complex process of commercial property leasing. Our Commercial Condition Reports are cost-effective and designed to provide clarity and objectivity, which can help protect your interests and prevent disputes from arising. Contact us today to learn more about our PCR services and how we can help you strengthen your commercial lease agreements.

Benefits of Commercial Condition Reports

Benefits for Owners:

- Protects the value of the property by providing a clear record of its condition before occupancy

- Reduces disputes and potential legal issues between owners and tenants over damage or alterations to the property

- Provides a baseline for ‘Make Good’ clauses, which reduces ambiguity and ensures compliance

- Increases transparency and objectivity, which fosters trust between owners and tenants

Benefits for Tenants:

- Provides assurance that any existing damage or defects in the property are documented before occupancy, thereby protecting tenants from being held responsible for pre-existing issues

- Helps to identify any potential issues or concerns with the property prior to taking occupancy, allowing tenants to make informed decisions about whether to proceed with the lease agreement

- Clarifies expectations with regard to the property's condition at the end of the lease, making it easier for tenants to comply with the ‘Make Good’ clauses and avoid disputes with owners

Benefits for Property Managers:

- Reduces disputes between owners and tenants over damage or alterations to the property, which in turn reduces the workload of the property manager

- Provides a clear record of the property's condition before and after each lease agreement, making it easier to manage and maintain the property over time

- Enhances the property manager's reputation as a professional and reliable service provider, which can attract more clients in the future.

Producing a Commercial Condition Report

Completing a Condition Report yourself can be a daunting task. That’s why we’ve created a helpful how-to guide and FREE downloadable template you can use to produce an accurate, reliable written report.

Or if you’d rather save yourself the stress, contact us for a quote on our Commercial Condition Report packages and let our experienced team inspect the property and produce a high-quality report for you. Having an unbiased third party can give owners, tenants, and agents peace-of-mind and reduce disputes at the end of the lease.

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