Office Lease Negotiations – Part 1

Besides employees and staffing, the highest expense in a dental practice is routinely the cost associated with the office real estate. That’s true whether you lease or own the office space. This 7 part series focuses on the common traps and negotiating points in offices leases that most dental practices fail to take into account when negotiating their lease. Some of these traps have even cost dentists hundreds of thousands of dollars, and put dentists in danger of losing their practice. 

Signing a commercial real estate lease is an important decision for any business, especially a dental practice.  Whether you’re, moving into your first space, expanding your practice, or renewing your lease, an office lease is a significant investment.  That’s true even if your practice does not require a huge space.  For example, a 2,500 sq. ft. practice with a 10-year lease at $3,125 per month ($15 sq. ft.) means that you are committed to paying at least $375,000. And, in many instances you may have personally guaranteed that payment and many other obligations (more on that in Part 4). 

With such a substantial commitment and sum of money on the line, it’s important for you to understand your lease and properly negotiate the terms. While this series discusses seven common pitfalls, it is important to remember that no lease is created equal. Leases are negotiated documents that represent the written culmination of a negotiated transaction. There is no “standard form” lease that is appropriate for all situations. Having a representative who is familiar with the leasing process, lease documents and their hidden traps is the best way of ensuring that your transaction will go as smoothly as possible and that the lease accurately represents your understanding and expectations, and protects your interests. 

This series will identify and discuss seven major areas that are common traps in leases for dental practices. Over the next several weeks we will discuss each of the following areas.

  1. Location and Relocation
  2. Rent Obligation
  3. Maintenance Obligation (Tenant and Landlord)
  4. Personal Guaranty
  5. Term and Renewals
  6. Assignment and Subletting
  7. Improvement Allowance

This week along with the introduction we will discuss #1 on the list, Location and Relocation.

Location and Relocation

Everyone has heard the saying “location, location, location” is the most important part of any real estate decision. While you may understand this concept, many tenants fail to really see what makes the location desirable. For dental practices, visibility, easy access, and the inviting nature of the spaceis of critical importance.

Being located in an old building down in the basement may be an okay place for dental lab, but it’s not a place for a dental practice. You want to have visibility of the practice when you drive by; and, at the very least, visibility of a sign. What if you had good visibility and a nice up-kept complex when you first singed your lease, but now it’s hidden by a tree or the sign is not lit any longer? Those types of issues come up often and can easily be handled in the lease with provisions that require certain maintenance obligations by the landlord. However, the landlord seldom places any true obligations on themselves in their draft of the lease (more on maintenance in Part 3).

In addition to visibility, easy access is crucial. Depending on the type of practice, proximity to referring providers can also be convenient and desirable. But, be careful, there are times when complexes contain direct competitors. In order to prevent this, it’s important for you to request an exclusivity clause for the type of services that you provide to limit unwanted competition. Generally this is not something that the landlord discusses with you upfront. You will need to ask for this provision and ensure that it is broad enough to protect you if your practice starts to add specialties. 

Once the location of a practice has been determined and you’re happy you may be in for a major surprise to find that in your lease the landlord reserved the right to relocate you to a different space in the building. Although it is preferable to delete this provision, this is not always possible; however, you can often address the provision in other ways. Assuming that you are willing to live with relocation, there are several issues to address, such as: (1) when may you be relocated; (2) how much notice is required before relocation; (3) where may you be relocated; (4) whether you have the right to terminate the lease instead of relocating; (5) who pays the costs associated with the relocation; and, (6) if the landlord is paying for the relocation, and how much.

Remember, leases are negotiated documents that represent the written culmination of a negotiated transaction. These “nuggets” of information in this article are just the tip of the iceberg for you and your lease. Stay tuned for the next part when we discuss your obligation to pay rent.

The author, Matt LaMaster, is the Principal Attorney of The LaMaster Law Firm, PLLC, a boutique style law firm committed to delivering legal services to dental professionals and their practices.  For more information about Matt LaMaster and The LaMaster Law Firm, PLLC, visit

This article includes information about legal issues.  Such materials are for informational purposes only and may not reflect the law in your jurisdiction.  These informational materials are not intended, and should not be taken as legal advice on any particular set of facts or circumstances.  You should contact an attorney for advice on specific legal problems.