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Dental Office Leases
One of the most critical features of any dental practice is the dental office lease. This document often governs what type of practice you can have, when you are open, and when you can sell your practice. Needless to say, dental office leases should be approached with care.
There's no such thing as a standard lease
The first obstacle to overcome is the false notion that your landlord is presenting you with a "standard lease." In truth, there's no such thing. In some circumstances, a landlord's insistence that he has presented you with an undeviating standard lease should signal alarms.
Every dental office lease agreement is drafted in favor of the landlord, some more so than others. Each lease agreement must be reviewed against your dental practice's needs and goals in order to meaningfully alter the dental office lease agreement to accomplish your long-term goals.
Who should negotiate your lease?
There are no laws requiring you to retain representation when contemplating a dental office lease agreement. Bear in mind, however, that the landlord is likely presenting you with a lease agreement that was drafted by an experienced attorney and negotiated by an experienced broker.
Accordingly, we encourage dentists to at least consider retaining assistance to review their dental office lease agreement. Our recommendation is even more vigorous if this is the dentist's first dental office. Savings in rent, mitigation against risks, and removal of needless liabilities over the life of a lease agreement typically far outpaces any expense spent on brokers, attorneys, accountants, and other dental consultants.
What aspects of the lease should you be concerned with?
Every dental office lease is different, so there is no standard answer. Furthermore, every dental office is different, with different staffing needs, different financial positions, and different goals. That being said, here are a few items to consider when reviewing dental office lease agreements:
- Exclusivity. Can your landlord put you in one space in the building, and the next week rent out another space to your competitor?
- Relocation. Many leases retain the right for the landlord to relocate you to a different space in the same building.
- Death or Disability. Who will take care of your lease agreements and practice if you suffer an accident and die or become seriously disabled? Will your insurance premiums have to go to your landlord and not your spouse?
- Terminations. How can you terminate the lease, and under what circumstances? If you are three years into a ten-year lease and a former mentor makes you an offer you cannot refuse in another town, does that mean you are bound to your current lease?
- Assignments. Will you be prevented from selling your practice until the end of the lease? If so, what kind of liability does that appear in the potential buyer's mind?
This list is by no means exhaustive. Each and every word of the lease can have legal effect, and should therefore be scrutinized.