the Unless you own the property, the lease of a dental space is the most important contract you will negotiate. The property lease for your dental practice is also one of the largest expenses your dental office will incur. For these reasons, you must remember that not only is the location of your practice an important decision, but also remember to read and familiarize yourself with every provision in your lease.
There are many terms and conditions set out in a lease agreement, and you must negotiate. If you feel you lack expertise in this area or would like to obtain the help of a professional to advise you, you may consider hiring a lease negotiator or tenant representative. They are usually much more familiar with demographic data and other relevant information to negotiate the most economic terms and pro-tenant provisions in the lease.
Consider having a contractor if you need a significant amount of reconstruction to convert the location into a dental office. They should have dental experience. This is to look over the location and confirm if they will be able to convert it without major costly issues. Once these areas are agreed upon, find an attorney with experience in leasing and dental health. This is in order to prepare the lease and possibly a proposal letter. The use of the proposal letter is to ensure that the tenant and landlord are in proper agreement. And that all matters discussed are documented.
Many items are included in the lease agreement that you may not even consider at the current time. You may need to address some of the things listed below:
Is It Cost-Effective?
Discuss what will be the responsibility of the tenant and what is the coverage by the landlord in the cost of lease. For instance, items such as taxes, insurance, maintenance, etc. Make sure to search for any other hidden costs you may not have discussed.
Escalation of Rent
Addressing any increase in rent due to inflation. Determine an acceptable arrangement with the landlord, and confirm it is set out in the lease agreement.
Terms and Options
Location is the largest factor to determine the value of a dental practice’s goodwill. Make sure if a lender is involved, the duration of the lease covers the length of the loan period. You might want to include options to renew as well.
There is no way to determine what will happen in the future. The lease agreement should set out the terms for periods of default in payment of rent that may occur. Also, the landlord should put in writing the amount of notice needed for vacating the space. And options to meet before the landlord terminates the lease.
Option to Buy/First Refusal Option
Landlords may offer their tenants an option to buy the property or the right to refuse to purchase it before they offer it for sale to the public.
This is the agreement by the landlord to not rent any adjacent space within a certain distance to a competing dental practice.
If you plan to build on or perform renovations to the property, include a provision for the landlord to either cover the improvements or allow you an allowance for the expenses. The landlord may consider a temporary non-payment of rent for a specified time to cover the improvements.
Sub-Leasing and Space Sharing
You may want to consider having partners who are specialists in areas of dentistry as a part of your dental practice. Make sure you allow for this in the lease.
After-Hours and Weekends
Remember to consider the location of the dental office in relation to the landlord. Is it a part of a larger building or a standalone structure? This will be critical in determining your office hours and whether you will be available for dental emergencies. Consider also whether the heat or air conditioning will be available during these times.
Determine who will be the responsible party for repairs or replacement of the HVAC systems. Most of the time the tenant is responsible for repairs and maintenance while the landlord is responsible for covering the cost of replacement of the system.
Death and Disability
If you are a solo dental practice owner, you may want to request an automatic termination of the lease in order to protect your family members in the event of your death or disability.
If you don’t have experience in creating and negotiating lease agreements, there could be many traps hiding within a lease. Hiring a professional to handle certain areas which may require a certain level of expertise may be well worth the investment. The team at Strategic Practice Solutions, LLC has been in business for over 30 years. Contact them today for help with your dental office management needs!