LEASING

What would you do if you had been growing a successful dental practice, the sale of which formed part of your retirement plan and finances and then one day your landlord wrote to you advising that they will be demolishing your building and you have 90 days to vacate? Can the property owner really do this to you? The short answer is Yes. Without proper review and negotiation of your lease, you could be agreeing to terms that can cost you thousands down the road, and even impede your ability to sell your practice. For example:

• A property owner could have rights that impact your daily use of the premises and ability to run your practice, such as rights of entry, limitations on advertising, use of the space, and hours of operation.
• You may have to pay additional costs each year in rent increases, leasehold improvements or landlord-imposed compliance matters.
• Relocation and demolition clauses could force your practice to close for a period, require you to move to a new location with less street visibility, or allow the landlord to terminate your lease prematurely.

These are only a few examples of the many ways a bad lease can hurt your practice. DMC’s commercial leasing lawyers have reviewed and negotiated leases for dentists with all kinds of property owners, from single property owners to multi-national real estate investment trusts, and we know how to spot and eliminate what could turn become time bomb for your practice.

Navigating lease renewals can be complicated and landlords can often use this process to make changes to your areas of the lease that they were willing to accept when looking for a tenant initially (e.g. exclusivity in the building, limitations on advertising and use of the space, and restrictions on hours of operation). Similarly, property owners often use the renewal to add in conditions favourable to them (e.g. a demolition clause) which will hurt your ability to sell your practice in the future. Lease renewals often have complex legal language and changes can get hidden within clauses you take for granted and don’t focus on. A lawyer will understand the nuances of each term and change proposed by the property owner and will be able to make sure you and your practice are sufficiently protected. DMC’s experience in the dental industry means we know the distinct areas of a lease that will negatively impact your practice the most (e.g. demolition clauses, leaseholds, assignment options) and will negotiate the terms in your favour and make sure there are no hidden disasters which could cost you money down the road.

If you’re starting up a new practice or buying an existing one, you need to negotiate with the landlord when it comes to things like rent, term, renewal terms, use, exclusivity, etc. The purchaser of your dental practice will likely require bank financing to complete the purchase. A bank will require security, which includes the comfort of knowing the purchaser can be a tenant for the entire length of time they are repaying the bank loan. Bankers also understand that the value of a dental practice rests partly on the time remaining on the lease and it’s renewal options and will be unwilling to extend financing without favourable terms, hindering your ability to sell your practice for what you deserve or at all.

DMC’s commercial leasing lawyers can help by reviewing your lease to see if any issues need to be addressed or can be improved. We will ensure that before the selling process gets underway, you have a solid lease that will make your practice even more attractive to potential buyers so you can get the best price without any last-minute problems with the property owner complicating and holding up the process.