When it comes to real estate for your dental practice, you have two options: buy or lease. Securing a suitable lease agreement that checks off the key boxes is essential for dental practitioners establishing or relocating their practices. Lease agreements govern the terms and conditions of the dental practice’s occupancy, impacting its operations, finances, and long-term viability. Here, I discuss a few of the key legal considerations and negotiation tips for dentist owners when entering into lease agreements for their practices.
1. Lease Term and Renewal Options: Negotiate a lease term that provides sufficient stability and flexibility for your dental practice, considering factors such as business growth, market conditions, and investment in practice improvements. Include options for lease renewal or extension to provide security and continuity for your practice’s operations.
2. Rent and Expenses: Negotiate the rent and expense provisions of the lease agreement to ensure they are reasonable and competitive for the local market. Clarify which party is responsible for paying various expenses, such as property taxes, insurance, maintenance, utilities, and common area charges.
3. Use and Zoning Restrictions: Verify that the property’s zoning permits the operation of a dental practice and any ancillary services or activities you plan to offer. Clarify any use restrictions or limitations imposed by the landlord or local zoning ordinances that may affect your practice’s operations.
4. Tenant Improvements and Build-Outs: Negotiate provisions for tenant improvements and build-outs to customize the space to meet the specific needs and requirements of your dental practice. Specify the scope of work, budget, timeline, and responsibility for obtaining necessary permits and approvals for construction and renovations.
5. Assignment and Subleasing: Include provisions regarding assignment and subleasing rights to provide flexibility in the event of practice expansion, relocation, or sale. Clarify any restrictions or conditions on assigning or subleasing the premises and obtain landlord consent as required by the lease agreement.
6. Default and Termination: Review the default and termination provisions of the lease agreement to understand the consequences of non-compliance or early termination. Negotiate favorable terms for cure periods, remedies, and notice requirements in the event of default by either party.
7. Legal Review and Due Diligence: Have the lease agreement reviewed by legal counsel specializing in commercial real estate to ensure it protects your interests and complies with applicable laws and regulations. Conduct due diligence on the property, landlord, and lease terms to identify any potential risks, liabilities, or hidden costs before signing the agreement.
To sum it up, negotiating a lease agreement for a dental practice requires careful consideration of legal and business factors to protect the practice’s interests and ensure a successful and sustainable occupancy. By understanding these legal considerations and following negotiation tips, dentists can secure favorable lease terms that support the growth and success of their practices. We have years of experience helping to set your practice up for success.