Page 49 - The Dental Entrepreneur

The Dental Entrepreneur

The Lease Contract

The building lease is the legal contract between the landlord and the dentist. As the lease rates
and leasehold improvements vary, so may the terms of a lease. It depends on whether you are
in what is termed a buyer’s or sellers market. A buyer’s market simply means that there is a
surplus of properties for rent (supply vs. demand) and the buyer has considerable room to
negotiate lease terms. A sellers market means the available space is at a premium and you will
have little room for negotiation.

Term Of The Lease

The terms and conditions of occupancy are a critical consideration of a leased space. Many
dentists are so anxious to get into a particular property that they compromise on important
terms of the lease. The most important condition to negotiate is a covenant from the lessor
prohibiting other dental practices from moving into the complex while your practice is
operating. It is also important to stipulate that the lessor will not lease to another dentist for
three years after the time you leave. This clause is critical because it is the basis upon which
goodwill is delivered if you move your practice. If you move from your original site and another
dentist has the ability to set up in your original location, a certain portion of your patient base
will remain with this practice location. People are creatures of habit and they may be
comfortable with your former location. Another important point is the transferability of the
lease. The lease should be easily assignable to another doctor if the practice is sold. A clause
should state that the permission of the lessor is required for assignment, but such permission
will not be unreasonably withheld.

Death Or Disability

This clause makes provisions for the tenant or the tenant’s agent to advise the landlord in
writing within a 30 to 90 day period of the occurrence of death or disability. This clause allows
for the termination of the tenants responsibilities with a reasonable period following one of
those occurrences.

Options

Often at the termination of the lease period the lessor has the option to renew the lease for a
specific period of time. The option means that you have the right to renew your lease but you
are not obligated to it. What this option does is help you to protect your investment in your
leasehold improvements long term and allow you to practice your entire career in the same
location. This also becomes very important when it comes time to sell your practice. The buyer
needs assurance that they may assume your lease under the same terms and conditions that
you practiced under.

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