Opening a dental office usually involves signing a commercial lease for the office space. Commercial leases work much in the same way as a residential lease on a home. You and your landlord are obligated to conform to the terms of the lease as-signed and any defiance or neglect of those terms is a breach of contract that can result in enumerated consequences or legal action.
Naturally, any practical dental office wants to avoid this kind of drama and potential legal trouble, which means being smart about not only how, where and with whom you lease but also the precise terms of the commercial lease itself.
Today, we're diving headfirst into how a commercial lease works for your dental office and how to make 100% certain (or as close as any real-world scenario can get) that you avoid any lease-related issues.
Commercial Leases are Grounded in Contract Law
The most important thing to understand about your dental office lease is that it is governed by contract law. Whatever the two parties write down and sign, within what is allowed by state and federal law, is legally binding. The duties, responsibilities, costs, and limitations defined for either party must then be adhered to until the end of the lease.
If either your dental practice or your landlord should fail to uphold an aspect of the agreement, that is a breach of contract. To prove that there has been a breach of contract, the breach-claiming party must show that:
- The contract existed and was signed in the first place
- The exact obligations defined in the contract
- The exact details of the breach
- That the breach was material to the contract
- Any damage caused by the breach
- If the breaching party has a legal defense against contract enforcement or eviction
Essentially, this means there must be a real contractual agreement, a real breach, and the wronged party holds the burden of proof to take any action.
The Triviality Exception
For those of you with picky landlords, you can breathe a little easier knowing the courts tend to dismiss trivial or highly technical claims of contract breach, especially those that are harmless and easily remedied. For example, your contract may state that you are responsible for changing the HVAC filter every 30 days and your landlord can prove you were 2 days late after a long federal holiday weekend. It is likely the courts will dismiss this, because it is not a substantial or damaging breach and could easily be remedied. These are not grounds for eviction or breach-of-contract consequences.
How to Avoid Accidental Breaches of Your Dental Commercial Lease
Read the Initial Lease Thoroughly
Whether you're about to sign a new lease or have one ongoing right now, the best way to avoid a breach is to know exactly what's written in the contract. Remember, leases are contractually binding for both parties and whatever clauses, terms, and consequences are written down is what you are bound to uphold.
If the lease is written in legalese, go over it with a dental attorney. Should that option not be available to you, make sure, at the least, to internet-search any terms that are legally ambiguous until you know exactly what they mean. It can help to frame out the lease terms in your own words in a separate document or on paper if writing with your hand helps lock concepts into your memory. Make sure you understand every clause, sub-clause, and consequences or fees for breaching those terms.
Chart out two columns; your duties, and your landlord's duties according to the lease. Include dates, schedules, and details where relevant. When you know exactly what is in your lease, it becomes much easier to avoid the little technicality bloopers that can rub a landlord the wrong way.
Red-Pencil Any Red-Flag Terms and Negotiate
If you are in the negotiation process or your lease renewal is coming up, it's worth your time to think about what you might change about the lease in front of you. Commercial landlords are often willing to negotiate on specific terms, especially if their lease was originally fairly standard. If there's anything you don't like, anything that seems fishy, or anything you'd like to renegotiate, red-pencil those terms.
Take any notes you need, and create a marked-up version of the lease to show exactly what changes you want to make.
Be willing to give a little if you're asking for concessions, like paying a little more rent or taking on a few additional reasonable responsibilities of your own in trade. This is a good time to work with your dental lawyer to talk about whether the terms you're unsure of are reasonable, easily changed, or worth negotiating. If so, discuss what you should request, and how you should approach the negotiation process. Your dental lawyer can draw up a new draft of the lease as a proposal to your landlord, or you can sit down together with the landlord and review what you'd like to see in your next lease to make you a happier and longer-term dental office tenant.
Know Your Lease by Heart and Work it into Your Business Plan
Once your dental lease agreement is finalized and signed by you and your landlord, it is important to be very familiar with the terms. Keep the terms in mind as you build next year's business plan and make sure to weave your lease-related duties into the schedule and budget as necessary.
Schedule your landscaper, service technicians, inspectors, and so on to arrive on schedule without having to be asked so that you can't possibly forget. Create an emergency contact information card and pin it in the break room so that staff know when to call the landlord or service personnel if something goes wrong. Get it all taken care of ahead of time and being familiar will allow you to know exactly what to do or who to call if something comes up.
Hold Your Landlord to Their Duties
If something does come up, be prepared to call on your landlord to fulfill their part of the bargain. Most of the time, commercial tenants don't have much to worry about and hardly ever need to speak to their landlords. Should the water go out, if a giant hole opens up in the parking lot, or if the roof starts to leak, your landlord is obliged by the terms of the lease to respond quickly and effectively to your requests for service.
If your landlord does not respond or acts in defiance of the lease terms, you should work with your dental attorney to hold the landlord accountable to their own contract. This isn't "making trouble,” it's standing up for your rights and potentially gaining the resources and compensation you need to move your office if necessary.
Check Your Duties Before Moving Out
Last but not least, go over the lease one more time if/when you're planning to move on to a new commercial location. Legal issues can arise after a tenant leaves the commercial property if the landlord claims they found proof of a lease breach while going over the property after departure.
So do your homework and make sure every closing-out duty is completed. Ensure that the space is clean, that no damage is left behind, that every maintenance duty is up-to-standard when you depart. Also, double-check your lease in case there are any unusual or surprise little clauses like having to undo your remodeling or shut off the water before you go.