The details in your dental office lease can cost you hundreds of thousands of dollars in traps and pitfalls, easily making it one of the most significant documents you will ever sign.

Landlords use the lease as a tool to make as much money as they can from a dentist, making it particularly critical that the terms and clauses within it are setup to help protect you, rather than hinder you. Read on to uncover the most common hidden traps in the lease, and how to avoid them.

Top 3 Traps in a Dental Office Lease:

Dentist and assistant reading a lease agreement

1) Relocation Clause: The relocation clause can give your landlord the right to relocate your dental practice to another location in the center or building. Landlords generally exercise this right when they have a tenant interested in expanding into the space or are willing to pay higher rental rates than you.

Landlords know that your dental office is an expensive, difficult–to-relocate businesses that can take months to re-build. Two things can put you out of business in the event you are relocated:

i) You are forced to absorb the cost of re-building your practice that can be upwards of $500,000.

ii) During the move, you may be faced with 3-12 months of practice “darktime” before the move is complete, meaning there is no incoming revenue, and business is at a stand-still.

2) Death & Disability Clause: Setting up the lease with a “death and disability” clause will protect your family and estate from inheriting debt and other financial obligations to the landlord in the event of death or disability and you are unable to work.

3) Assignment Clause: If you plan to sell your practice in the next 10-20 years, it’s important to be sure that the language in your lease permits you to sell your practice at all! The “assignment clause” in your lease has a direct effect on your ability to sell your practice. Many dentists are unaware that the assignment clause may permit the landlord to refuse their transition request altogether, with the right to terminate the lease agreement, forcing you out of the space with 30 days’ notice. Often the assignment clause also permits the landlord to a percentage of your sale proceeds when you finally do sell the practice.

The above sections of a lease agreement, along with many others are not taught to dentists at any point in their careers, yet the success of the practice and the eventual exit from dentistry hinge on them. The most effective way of avoiding these risks is by identifying them in advance and negotiating them out of your dental office lease before you sign it. If they cannot be removed, often they can be re-drafted in a way that is more favorable to the tenant.

Learn more about the top $100,000 lease risks by speaking to a dental leasing expert at 1.800.459.3413. We’d be happy to discuss your lease terms and provide any advice we can; we’re here to help!

Schedule your personalized office leasing consultation with an expert today!