Tips for Negotiating the Medical Office Lease Contract

Written by Posted On Sunday, 07 January 2018 07:35
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As a doctor you are able to save lives, but there are some things you can't do, despite the years of hard work you have under your belt. That is negotiating your lease. It might sound easy, but unfortunately many doctors are unaware of the essential points they need to talk during the negotiations. As a result they end up in contracts that disadvantage them.

Dr. Leon Reyfman says the leasing for a private practice needs to consider the patient's safety, as well as other specific requirements of the business. You also have to keep in mind the fact your business is expected to grow in the future. Here are tips for negotiating the medical office lease contract.

Consider future growth

When you negotiate the lease for your office you need to ask yourself what will happen if you will bring other doctors, in order to expand the business. In order words, ask the landlord if there are any possibilities to rent additional space, at the same rate.

Learn the terms

One of the biggest problems with renting contracts is that they contain specific terms, which might lead to misunderstandings. The terms which lead to confusion most often are rentable square feet and usable square feet. The latter is the area you can use, while the other is the area you are paying for. The difference between the two consists in the additional spaces, like hallways.

Another term you will find in renting contracts is rent escalator. This is used to define the amount by which your rental will increase over time. In most cases the rent escalator is linked to inflation. Many landlords set it around 2-4% per year.

What is included in the rental contract

The rental agreement can include a number of rules for the tenant. Among them is the obligation to pay for the utilities, the property insurance, the maintenance fees and taxes. Before you sign the contract, ask what is the cost of these expenses and if it is likely to grow in the future. You can try to negotiate with the landlord who will pay which of these expenses.

Know your rights

A tenant has the right to receive Tenant Improvement Allowance. This is a payment made by the landlord to the tenant, for the costs of property improvements. While it doesn't cover all the improvements, it does cover expenses like repainting or recarpeting.

Watch out for the evergreen clause

Many lease contracts include an evergreen clause, which implies the renewal of the agreement when it expires. Some private practices benefit from this clause, but there are also times when you don't want your contract to continue. If the lease agreement includes an evergreen clause, you need to communicate your intention to discontinue the contract when it expires to the landlord, 90 to 180 days in advance.

Negotiating your lease contract is very important for your private practice, so you need to carefully review all the clauses and make sure you sign a beneficial agreement. All the money you can save from the rent is going to become investments in your own business, so analyze the pros and cons of each clause of the rental agreement.

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Narendra Sharma

Naren is an interior designer and real estate expert. I’m grateful everyday to my wonderful clients who have entrusted me with their homes.

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