Dental Lease Pitfalls

The details in your dental office lease can cost you $100,000’s in traps and pitfalls, easily making it one of the most significant documents you will ever sign. Landlords use the lease as a tool to make as much money as they can from a dentist, making it particularly critical that the terms and clauses within it are setup to help protect you, rather than hinder you.

Top 3 Traps in a Dental Office Lease:

 1) Relocation Clause: Does your lease give your landlord the right to relocate you? Landlords are fully aware that a dental office is an expensive, difficult–to-relocate businesses that can take months to re-build.  Two things can put you out of business in the event you are relocated:

i) You are forced to absorb the cost of re-building your practice, that can be upwards of $500,000.

ii) During the move, you may be faced with 3-12 months of practice “darktime” before the move is complete, meaning there is no incoming revenue, and business is at a stand-still.

 2) Death & Disability Clause: Is there a death and disability clause in place that protects you in the event that something unexpected happens, and you’re unable to work? Is the lease setup so that your family is not left paying debts or monthly rent?

 3) Assignment Clause: Do you plan to sell your office sometime in the next 10-20 years? Are you sure  your lease permits you to sell your practice at all? Unfortunately, many do not. It’s critical for dentists, more so than any other type of tenant, to ensure that the lease agreement is setup properly to allow for the sale of the practice and lease transfer. If not, the landlord can either prevent the sale from happening, or collect proceeds from the sale in exchange for granting permission to sell.

The above sections of a lease agreement, along with many others are not taught to dentists at any point in their careers, yet the success of the practice and the eventual exit from dentistry hinge on them.

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