Basics of Lease Negotiations for Dental Office Tenants

April 23, 2021

All kinds of leases require a little negotiation, but there is a need for more negotiation in the case of a dental office for rent. As dental office rent is the largest expense for a dentist, it is crucial to take due care before signing the lease document. Check out how to do a dental lease negotiation.

Negotiating can benefit from reduced rent and protect your interests, especially if there are provisions in the lease agreement which may restrict your freedom or impose obligations. Here you will learn some of the basics of lease negotiations for dental office tenants.

1. Create Competition for Your Tenancy

Whether leasing a new location for your new practice or renewing your existing lease, negotiation for more than one location simultaneously is essential even if you are not interested in the other location. Showing your landlord your other options will benefit you in achieving reduced rental rates and improvement in clauses.

2. Negotiate Rent

Before negotiating, make sure you have done your research and know the dental office rents in that location. The landlord’s objective will be to lease out at the highest possible rate, and you need to make sure you are not overpaying. You will be in a better position to negotiate if you know the rents of similar spaces or spaces in your area. Also, remember the rent will increase per year. Check the annual increase rate every year with the landlord, which will protect you in the future.

3. Lease Term

Transition to a new place can be expensive and can hurt your goodwill, so it is crucial to secure a long-term lease. Negotiate a dental office lease term between 5 and 15 years. Also, you can negotiate to include an option to renew the term for additional periods.

4. Type of Lease

There are three major types of dental lease agreements, and you should consider all the costs. In a triple net lease, the tenant needs to pay the base rent and all the three nets – taxes, insurance, and cost of maintenance. You also need to pay the expenses for utilities. You need to ensure that only fair and reasonable costs are included in your lease, as many times, unreasonable operating costs are passed on to the tenants by the landlords.

5. Ensure the Lease Can Be Assigned

A lease can be assigned and, in most cases, landlords include conditions that need to be satisfied. During negotiations, tenants should ensure the removal of restrictions or conditions on the future assignment of the practice. Ideally, there should not be any restrictions. But in reality, landlords include a clause requiring their consent which can delay the assignment to another dentist.

6. Get the Right of First Offer to Purchase

The landlord may wish to sell the property in the future, which can be disastrous for your practice. To avoid this, you can request the landlord and include an option to give you the first offer to purchase and establish a predetermined price. This will protect you from losing revenue if the landlord wishes to sell the office space.

Utilizing the expertise of a professional who is aware of the intricacies of negotiating will greatly benefit dentists. These professionals work as a liaison between you (the tenant) and the landlord, managing the entire process of negotiating a dental office for rent.

I hope you learned about dental lease negotiation. For informative reads, check out the rest of our blog.


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