Commercial lease restoration and make-good in Canada: scope, cost and handover

Make-good is the practical work required to return the premises

At the end of a commercial lease, the tenant may need to remove property, repair damage, reverse alterations, clean the premises, deal with cabling or signage, close permits and return keys or access devices. The exact obligation comes from the executed documents and facts—not from a universal Canadian definition or a generic checklist.

A useful plan starts by translating that obligation into ordinary questions: What must leave? What may stay? What damage must be repaired? What systems must be disconnected or restored? What evidence will the landlord accept? Who decides, who pays and when must the work finish? Keeping those questions separate prevents a broad surrender clause from becoming an unsupported lump-sum guess.

Reconstruct the complete current obligation before scoping work

Start with the signed lease, every amendment, renewal or extension, assignment or assumption document, alteration approval, work letter, drawing, deficiency record, notice and side agreement. A later approval may allow an improvement to remain, impose a special removal condition or change who owns it. A lease abstract can help find the clause, but the executed source controls.

Create one source record for each possible scope item. Record the document, exact section or page, relevant defined terms, whether the source has been verified and any conflicting provision. Route ambiguous wording, survival provisions, damage standards, ownership, casualty, environmental and indemnity questions to qualified counsel rather than converting them into a false yes-or-no answer.

• Confirm the correct legal tenant, landlord, premises and current expiry or termination date.
• Read surrender, alterations, repairs, trade fixtures, signage, environmental, access, insurance and holdover provisions together.
• Preserve landlord approvals and elections separately from informal site conversations.
• Mark a source verified only after it has been checked against the complete current document set.

Separate original condition, permitted changes and actual damage

The lease wording is only half the file. Assemble possession photographs, condition reports, base-building drawings, landlord-work records, tenant-improvement drawings, permits, change orders, maintenance history, incident records and current photographs. Create a room-by-room or system-by-system schedule that shows what existed, what changed and what condition is visible now.

Avoid labelling ordinary wear, pre-existing condition, insured loss, latent defect or tenant damage without the required factual and legal review. Instead, record the observed condition and its evidence. A dated photograph, drawing revision, consultant report or maintenance record is more useful than an unsupported conclusion about responsibility.

Freeze the scope only after required choices are made

Some leases allow or require the landlord to elect which alterations, improvements, cabling or fixtures must be removed. The notice form, timing, recipient, delivery method and scope may be important. Track the election as a separate decision with a due date and written evidence; do not assume silence means the item stays or goes.

Use four working states: required, landlord-elected, under review and disputed. A fifth state—confirmed not required—should have its own source. Once the parties have resolved the open items, issue a controlled scope baseline with drawings or marked photographs. Changes after that point should show who requested them, why they are in scope, the cost and schedule effect, and whether the handover date moves.

Build cost from quantities, confidence and timing

Price each scope item using a quantity, unit, low cost, expected cost, high cost, tenant share, timing month and price-confidence label. A rough allowance, project budget, vendor quote, contracted amount and actual paid cost are not interchangeable. Preserving the confidence state lets decision-makers see which part of the budget is mature and which part is still a placeholder.

Then show the project costs around the trade work: mobilization and general conditions, contingency, professional fees, permits and inspections, waste handling, testing, security, temporary services and other fixed costs. Escalation should be an explicit scenario applied by planned timing—not an invented market forecast. Keep tax treatment and recoverability as separate accounting questions.

Stop and assess before work may disturb hazardous material

Removal work can disturb asbestos, lead, silica, mercury, mould, polychlorinated biphenyls or other hazardous material. The Canadian Centre for Occupational Health and Safety says demolition planning should assess structural stability and hazardous materials and use a work-specific risk assessment. Its workplace asbestos guidance advises checking with a qualified specialist before work in areas that may contain asbestos-containing material.

Requirements vary by province, municipality, building, material and scope. Alberta's asbestos guidance, for example, describes training and notification requirements for work that may release asbestos fibres. Build a separate environmental and hazardous-material gate: inventory or assessment, qualified consultant, sampling where appropriate, safe-work plan, regulatory notification, contractor qualification, disposal route, air or surface clearance and final report. Do not bury this work inside a generic demolition allowance.

• Do not disturb suspected hazardous material to investigate it informally.
• Confirm who commissions, controls and relies on the assessment and clearance evidence.
• Separate ordinary construction waste from regulated or specialized waste streams.
• Price shutdown, containment, replacement materials and re-entry requirements where applicable.

Treat removal as construction work when the scope requires it

Interior demolition, wall alterations, mechanical, electrical, plumbing, gas, sprinkler, fire-alarm, structural, signage and occupancy work may require permits, inspections, professional involvement or landlord approvals. The City of Calgary notes that commercial alterations, repairs and demolition can require building and trade permits and that the contractor must arrange required inspections. Other Canadian jurisdictions use their own legislation, codes, permit categories and processes.

Build the delivery plan with the authority having jurisdiction, property manager, consultants and qualified contractors. Record approval prerequisites, shutdown windows, loading and elevator access, roof or utility controls, insurance and safety evidence, waste routing, inspection stages, professional schedules where required and the exact document that closes each permit. A contractor saying the work is complete does not necessarily close the municipal or lease file.

Plan backward from vacant possession and accepted handover

The lease expiry date is not automatically the last day work can occur. Confirm when operations stop, inventory leaves, systems are decommissioned, contractors gain access, utilities are isolated, inspections occur, deficiencies are corrected, keys are returned and the landlord accepts possession. Include design, tendering, permits, long-lead materials and landlord review before site work starts.

Model the financial effect of a late handover separately from construction cost. The applicable holdover rent, damages, indemnities and acceptance standard depend on the lease and facts, so the tool uses only the daily scenario amount entered by the user. Also expose business downtime, duplicate occupancy and move dependencies where the old and new premises overlap.

• Create a critical path for elections, assessments, design, approvals, procurement, work and closeout.
• Assign an owner and evidence requirement to every milestone.
• Keep float visible before the contractual handover date.
• Escalate unresolved access, shutdown, permit and landlord-review constraints early.

Compare doing the work with a documented commercial settlement

The parties may discuss a restoration cap, landlord contribution, agreed scope reduction, in-kind handover, cash payment, salvage rights or deposit credit. Show each item separately and count it only when the source and conditions are verified. A deposit held by the landlord is not automatically available as a dollar-for-dollar restoration credit.

A cash offer should be compared with the entered expected work plan and transaction fees, but arithmetic does not establish a release. Counsel should confirm the parties, premises, payment timing, taxes, exact obligations released, retained claims, environmental and damage treatment, survival, evidence, access, deposit handling and final possession. Keep the signed agreement with the lease record and close the superseded scope items transparently.

Finish with an evidence package, not an empty unit

Schedule a pre-handover walkthrough early enough to correct deficiencies. For each scope item, collect before-and-after photographs, consultant reports, test or clearance results, permit and inspection closure, trade invoices, waste or disposal records where required, equipment shutdown confirmation, warranty information and landlord sign-off. Track keys, access cards, remotes, passwords, manuals and meter or utility information without placing sensitive credentials in an uncontrolled worksheet.

Document the date and condition of possession transfer, outstanding exceptions, deposit accounting, final meter readings, utility responsibility and any continuing access. Obtain the written acknowledgement or release contemplated by the negotiated documents. Archive the final scope, cost, change log, evidence index, settlement, acceptance and lessons learned in the organization's approved system.