This past week I negotiated a lease on behalf of an ophthalmologist and I wanted to share an essential but often overlooked lease provision, “Termination upon Death or Disability.” If a closely-held company is entering into a lease, the company needs to consider whether it can continue to operate if a critical owner or employee dies or becomes disabled and cannot work. Examples include physicians, dentists, veterinarians, attorneys, architects, chiropractors and other types of unique personal services where another person cannot easily step in and run the company. The company must have the ability to terminate the lease if it loses its critical person.
Without protective language in the lease, the company will remain bound to the lease despite the absence of the critical person.
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