Case Study: Negotiated a Total Rental Savings of $160K for Dr. R.

Dr. Daniel R. is a General Dentist running a successful practice out of Ortonville, MI.

The Problem

As building-owners of 35 years, Dr. R. and his wife were growing weary of the constant demands involved in maintaining a property and being landlords. They also strived to grow the practice and expand, but were limited by the size and number of treatment rooms available in their 2,400 sq. ft. unit. After much deliberation, Dr. R. and his wife made the difficult decision to sell the building and relocate their practice.

The Challenge

The doctor had narrowed down the search to 3 locations in Clarkson, MI. Unsure of how to negotiate the details of their tenancy with the landlord, Dr. R. and his wife attended a seminar in Troy, MI presented by Cirrus Consulting Group on the topic of “Dental Office Lease Negotiations”. The seminar discussed the top $100,000 traps buried in a lease, and the harsh negative impact they can have on a practice’s future.

With this newfound knowledge, the doctor decided against using the services of his long-time corporate attorney for the negotiation, and instead sought out the expertise of Cirrus and their dental office lease negotiators. Dr. R. and his wife chose a location for their practice and were soon presented with the dental office lease for the space by the new landlord. Dr. R. was looking for the new lease to provide him with the following:

  • Fair and affordable rental rates.
  • Exclusivity to practice dentistry in the building.
  • Long-term investment protection.
  • Minimized personal risk.
  • The flexibility to grow and expand.

Cirrus conducted a thorough review and analysis of the lease, highlighting critical dates, risks and pitfalls. They uncovered a lack of death and disability protection in the lease, a significant issue for Dr. R. as a late-career dentist. The lease also permitted the landlord to move competing dentists into the building, and collect proceeds of his future practice sale; there was a lot of work to do.

The Solution

Cirrus took over the entire lease negotiation from start to finish, implementing their strategic and proven 7-step negotiation plan, achieving the following key “wins” for the doctor and his wife:

  • Negotiated a reduction in rent, saving the doctor $160,000 over the life of the lease.
  • Secured a 10 year lease term with 3 x 5-year “options to renew” from an original 2 x 5-year options.
  • Adjusted the “Assignment” clause to remove the landlord’s right to proceeds of the practice sale.
  • Altered the “Personal Guarantee” language to protect the doctor and his wife from remaining financially liable after assigning the practice.
  • Added a “Death and Disability” clause into the lease to protect the doctor and his wife from incurring hundreds of thousands of dollars in rental obligations in the event of death or disability.
  • Added “Surrender” language to ensure all trade fixtures remain the doctor’s property upon practice exit.
  • Added “First Right” language giving the doctor the first opportunity to lease the adjacent space or buy the building should it become available for purchase.
  • Added an “Exclusivity” clause into the lease, prohibiting the landlord from leasing any space in the building to another dentist or dental hygiene professional.

“Cirrus secured a fair lease that protects my interests as well as the landlord’s. I feel excited and focused on the next decade of expanding my practice, and can now concentrate on the dentistry that I love.”

– Dr. Daniel R., DDS | Ortonville, MI

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