Dental Office Relocation Case Study

Dr. Chan, DDS is a General Dentist practicing in a beautiful dental office in San Diego, California. In April 2011, his then 20 year dental office lease was approaching its expiry, with one remaining 5 year option to renew.

The Problem

Dr. Chan had for years felt that the details in his office lease were unfair and written in a way that only benefited his landlord. The doctor felt trapped and without options, and so was ready to sign on for another 5 year extension, complying with the landlord’s terms.

“I had been enslaved to my landlord, pretty much having to yield to all his provisions, with little benefit to me. I had paid virtually millions of dollars in rental payments over the decades, without getting much in return.” – Dr. Chan, DDS

The Challenge

On the recommendation of a dental colleague, Dr. Chan reached out to the dental office lease negotiation experts at Cirrus Consulting Group to review his lease and current situation. Cirrus completed a thorough review and analysis of Dr. Chan’s then current lease agreement, flagging it for problem areas, risks and pitfalls, while working to understand the doctor’s career goals and practice needs. He was looking for the following positive results from his dental lease negotiation:

Maximized flexibility to ensure a smooth sale and dental practice transition
Long-term practice protection and security to bring in successors
Fair and affordable rental rates
Exclusivity to practice General Dentistry in the building
Minimized personal risk and liability

The Solution

After a detailed review, it was determined that neither the lease nor the landlord could provide what was necessary for the secure, long-term business structure that Dr. Chan was looking for.

Cirrus advised that it was in the doctor’s best interest to find another dental practice and relocate. After an extensive search, a new practice location was found. Armed with Cirrus to negotiate his new dental office lease, they created a strategic and tactical plan to effectively negotiate the offer to lease (and subsequent lease agreement), achieving the following key “wins”:

Aggressive, yet fair rental rates.
A 15 year initial term, with 3 x 5 – year options to renew, at fair market rent.
An “exclusivity” provision to prevent the landlord from leasing any other space in the building to a General Dentist.
Insertion of a broad “permitted use” provision, allowing the Dr. Chan to practice all forms of dentistry.
Significant reduction of personal risk via the insertion of “sale of practice language” in the assignment clause. In the event Dr. Chan assigns or sells his practice to another dentist, the landlord cannot terminate the lease, or accept any proceeds of the sale, which did not exist prior.
Insertion of death and disability clause that will save Dr. Chan and his family (or estate) from incurring hundreds of thousands of dollars in rental obligations.
Limited personal guarantee; rather than being personally liable for the duration of the lease term, Dr. Chan will be released as the personal guarantor after 5 years of the initial term, and is exempt from all financial responsibilities and obligations thereafter.

“The Cirrus Team successfully negotiated a dental lease which favors me, the tenant, containing many long term benefits for the health of my dental practice. I cannot thank Cirrus enough for being so helpful in uncovering what exactly was in my former lease. They helped guide me to see a better vision of how I could obtain a better lease and a brighter future. I would highly recommend any business-minded doctor to have Cirrus be a part of their team; the investment and their expense are well with it.”

– Dr. Chan, DDS

For 20 years, the Cirrus Team of expert dental lease negotiators have been committed to getting doctors fair and affordable financial terms in their leases. Cirrus is devoted to ensuring the dental office lease is set up for long-term practice stability, flexibility, security and success, with the ability to sell and transition out of practice.