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Charles Feitel

What Your Landlord Doesn't Want You To Know About Dental Office Leases (Part I)

What Your Landlord Doesn't Want You To Know About Dental Office Leases (Part I)

5/29/2019 8:46:24 AM   |   Comments: 0   |   Views: 16

When you enter into lease negotiations with your prospective landlord, you desperately want to believe that he’ll negotiate everything in good faith.

Therefore, you want to give him the benefit of the doubt. After all, why wouldn’t you? No one wants to think the worst of another person. This could kill the excitement you get from moving into your new office space.

Although there are some good landlords, the sad fact of the matter is that there are lots of shysters, too. Unfortunately, landlords like to sneak dark secrets into leases that bilk dentists out of their hard-earned money.

And their preferred vehicle for carrying out their schemes is a lease agreement.

A lease can have unforeseen consequences on both your practice and your life. You need someone who can recognize these consequences before they make their presence known in the real world and end up costing you.

Because it’s too late to make changes to it after the ink has dried.

Getting stuck with a bad long-term lease is a nightmare. If you have to break the contract, you’ll have to keep paying on the space until your landlord can find a replacement.

Since you're financially committed until the lease runs out, your landlord doesn't have much incentive to do that.

That’s why you need a lease that’s carefully written by a professional who knows what he’s doing. He’ll be able to immediately recognize any wording that won’t be in your best interests.

Boilerplate Leases

One way landlords swindle you is to use standard boilerplate templates to write their leases. By doing this, they make sure everything in the lease maximizes their profits. Over the years, they’ve honed this model into a well-tuned, money-making instrument.

This doesn’t benefit you. Your lease needs to be personalized for your particular set of circumstances so that it fits you like a proverbial glove.

Enlist the help of savvy brokers and attorneys who will create a lease agreement that reflects you and your practice. This is a contract that’s also crystal clear on what your responsibilities are. And, what the landlord is obligated to do.

A lease written this way prevents future misunderstandings and is worth its weight in gold.

There may be hidden dangers in a lease that a landlord wrote himself. Most often, this comes in the form of language that’s vague and difficult to comprehend.

Recapture Clauses

Your lease might say you need to get the permission of your landlord before assigning or subletting. The lease might say that the landlord promises to be “reasonable” when making this decision.

This is known as a “recapture clause.” A recapture clause is a provision that allows the landlord to terminate a lease if specific triggers are activated.

One potential trigger is a tenant’s intention to sublease the property to a secondary tenant. If a practice isn't doing well and wants to close shop, it may try to sublet the space to another practice. This is better than defaulting on its lease.

The landlord, however, would probably prefer to sign a new lease with the new practice. When the first tenant informs the landlord of its intent to assign the property, the landlord can invoke the lease’s recapture clause.

Sometimes, the recapture clause language is left deliberately vague. This way, your landlord could reject your request for any reason under the sun.

Request that the landlord take out this provision. If the landlord removes it, understand that the landlord will most likely want the right to refuse the assignment if the new tenant is a financial risk.

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