DTUS1310

f DT page 11 shall be $2,500). Damage to office What happens if your dental office is damaged by fire or some other casu- alty loss, and you are unable to occupy the building for four to six months? Needless to say, this could devastate your dental practice. Many lease agreements impose no real obligation on the property owner to rebuild the damaged premises. In fact, most lease agreements give the property owner the greatest flexibil- ity in determining whether or not to rebuild a damaged office space. By contrast, the tenant is typical- ly required to move back into the office space within a short period of time after the office space has been repaired. Therefore, every lease should include a provision that will allow a tenant to terminate the lease if the property owner has not completed restoration of the office space within a specified period of time. As a pre- caution, a lease should contain the following requirements: • That the property owner carry full replacement-cost insurance on the building. • The property owner commence repairs within 30 days of the loss and complete the repairs within 120 days of the loss. • The tenant may terminate the lease agreement if repairs are not completed within a specified peri- od of time. In addition, as a tenant, you should always carry insurance to cover the cost of any type of tenant improvements and equipment. Lease assignment upon sale of the practice The property owner always has the option to grant or deny a tenant’s request for an assignment of an exist- ing lease. Imagine if you enter into a contract to sell your dental practice, and your property owner will not assign your lease to the purchaser. Ideally, a practice sale agreement should contain a clause that states the sale of the practice is contingent upon the property owner assigning your lease to the purchaser or the property owner entering into a new lease agreement with the potential purchaser of your practice. In today’s market, the growing trend is to hold a previous tenant lia- ble for the terms of their existing lease agreement, even though a new tenant (the purchaser of a dental practice) is now occupying the space. Other areas of concern What happens to a tenant’s obligation under a lease agreement if a tenant dies or becomes disabled? Generally, a property owner will not permit a tenant or his/her estate to be absolved of liability in the event of death or dis- ability. In most cases, unless otherwise specified, a tenant or his/her estate will be required to pay the specified rent according to the terms of the lease agreement, even if a tenant dies or becomes disabled. Therefore, a tenant should always attempt to nego- tiate a release (“buy-out”) or termina- tion of the lease in the event of his/her death or disability. In addition, many leases contain relocation clauses that state a prop- erty owner may move a tenant to another location within the building or complex. As a result, a relocation clause must be carefully reviewed. Summary It is important to remember that the property owner or his/her attorney drafted the lease agreement. You should always seek legal advice before you sign a lease agreement. As a tenant, if you fail to do your due diligence, it may be a very costly mistake. DT DENTAL TRIBUNE | May 2010 Practice Matters 13 AD About the author Stuart J. Oberman, Esq., has extensive experience in repre- senting dentists during dental partnership agreements, partner- ship buy-ins, dental MSOs, com- mercial leasing, entity forma- tion (professional corporations, limited liability companies), real estate transactions, employment law, dental board defense, estate planning and other business transactions that a dentist will face during his or her career. For questions or comments regarding this article, visit www. gadentalattorney.com. (Front Page Photo/Dreamstime.com)