Tips & Advice

The Age of (Mis)Information – Myth #1: All Commercial Leases Are The Same

Posted on September 18, 2018 | By Pamela Gelfand

Dentaltown Magazine’s February 2017 issue published an article saying that Google is the leading cause of tooth decay.

Google is, by far the #1 search engine, meaning that there’s a ton of information out there. And a good portion of that information about dental care is inaccurate regarding most DIY treatment. The dental patient consumer ultimately suffers due to misinformation. This is a thorn in every dentist’s side.

While it is doubtful that a dentist will go to the Internet and become a lease negotiation Do-It-Yourselfer, there are misconceptions that can cost dental practitioners tens of thousands of dollars every year. How many dollars were sitting on the table during the lease negotiation that could be dollars in your pocket? And how much unnecessary risk are you shouldering due to the contents of your lease agreement? You would be surprised!

It’s time to revisit your misconceptions about hiring a dental Broker. For instance, thinking all commercial leases are equal, and the most blatant, the dental tenant or buyer will get a discount in real estate costs if they don’t have a tenant rep broker.

MYTH #1: – All Commercials Leases Are The Same

How many times have you heard from a Landlord, “Oh, it’s a standard lease”? The fact is, all leases are not the same, and there is no such thing as a “standard” lease no matter what any Landlord says. The Landlord may offer the same lease to all general office or retail tenants, but a dental lease is much more complex and has many more far-reaching consequences to the dental practitioner. The difference? The dentist makes a large capital investment in building out the location and establishing a practice, and plans to be in place for a minimum of 10 years, and upwards of 20 years or more.

During the lease term, many unforeseen problems can arise placing the dental practitioner in a captive position with a landlord – or worse, a lending institution. Why? Because the lease agreement did not address unforeseen events, placing the dentist at risk of devastating financial loss. A few examples of events that do occur and have, many, many times.

The building is foreclosed upon. That applies to current or future owners. The dentist loses their lease. The new owner may offer a new lease at a much higher rate, or force the dental tenant to relocate. What about the dollars spent on build-out? How are current lender or installment loans affected?

A build-out contractor does shoddy work. The tenant is forced to pay the contractor by the terms of the lease. The tenant can sue the contractor and hope to receive restitution. The tenant may need to hire another contractor to make corrections – the dentist’s working capital suffers due to the additional expense and additional time needed to make the corrections. Major financial setback.

The landlord has the sole right to determine if the practice can be transferred or sold. The selling dentist can lose a good opportunity to make a profit selling the practice.

An adjacent tenant is emitting noxious odors, and the dentist is losing patients, revenue, and employees. If the lease doesn’t specifically protect the dentist, they have no recourse and will suffer financially.

Always remember, when a dispute occurs, all parties look to the lease for resolution. Dental Real Estate Experts’ client-centered negotiation assures protections from these and many more business issues that can pose a threat to the dental tenant’s revenue, and ultimately, profitability.

Read MYTH #2