5 Provisions to Have in Your Dental Practice Lease

Here are five provisions that you should have in your dental practice lease:

1.      Death and Disability

2.      Relocation Provision

3.      Rentable v. Useable Square Footage

4.      Exclusivity

5.      Assignment & Subletting

Let’s take a further look at what each of those are.

1.     Death and Disability

In an ideal world, this would go into every single lease. It allows your spouse or your estate to get out of the lease in the event that something should happen to you. If it gets accepted, great, if it doesn't, don't lose sleep.

2.     Relocation Provision

A lot of leases have a clause in it that allows a landlord to relocate you to another location - sometimes to not as great of a location as you currently have. This is normally on the landlords dime, so they are normally hesitant to do this. However, if they have bigger plans for your current location, they will move you. You want to  make sure that your relocation clause has language that forces your landlord to pay for all of your moving costs, construction, and try to get language in that allows you to be the one to approve the move you'd be even better off.

3.     Rentable v. Useable Square Footage

Rentable square footage is the square footage that you pay rent on.  What's the difference between rentable and useable square footage? Well, in your rented square footage you'll have to take into account shared lobbies, common areas, elevator shafts, restrooms, etc. Those are all included in your rentable square footage. Always ask your broker or landlord about what the rentable  AND useable square footage is so you advise your designers and others, so you know what's going to fit in your useable space.

4.     Exclusivity

Language that you or the landlord would want to put in that basically precludes the landlord from putting another tenant that does your work (in your industry, i.e. another dentist) in the building.  This is particularly recommended if you're a specialist - for instance orthodontist, pediatrics, endodontist, oral surgeon, etc.  Not to exclude other dentists outside of your specialty, but if you're a pediatric dentist you should seek exclusivity as a pediatric dentist preventing others with that same specialty from taking up tenancy in the building.  For those that are general dentists, you may consider getting exclusivity for general dentistry, not for dentistry as a whole.  The reason is this: If you're a general dentist and an orthodontist takes up tenancy in the building/shopping plaza it could drive more business to your own practice.

5.     Assignment & Subletting

This can often times be overlooked but is important to have in your dental practice lease.  If something happens to you, your life changes, you need to move, you need to sell, etc. you want to be able to sell your office and transfer your lease to someone else without the landlord having too much power in terms of those negotiations. Be mindful of the language in this section as there are some out there that have included language that demands a percentage of the sale, a fine, or even that the landlord would be allowed to take back the property.

Bottom Line

If you’re not comfortable with the provisions in your lease (or lack thereof) it’s okay to counter.  Working with a real estate broker can also help understand your lease options.  You’re not powerless in negotiating your lease.  Landlords know the value of leasing to dental practices.  Carefully review everything and do your homework.

Dental B-School is full of information and resources to help you avoid any costly mistakes.  Dig into our free resource section for more information or contact us to schedule your strategy session today.