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What Is a Medical Lease Agreement

Posted by on April 14, 2022

Many medical practices in today`s environment rent space to other healthcare providers. Many leases contain language stating that any assignment/sublease/licence must be approved by the landlord through a specific consent process and that the tenant is responsible for any additional costs associated with that assignment/sublease/licence. To avoid this process, it is recommended that language be added that allows the tenant to sublet or license a certain percentage of the space to a health care provider without obtaining the landlord`s consent. Simply put, usable square feet (USF) refer to the space that the tenant can use to run their business. It consists of all the space within the limits of the building floor and can also include unusable areas such as mechanical rooms and guard cabinets. The rental square foot (RSF) represents this usable space plus a proportional share of the common space. These include things like lobbies, toilets, hallways and stairs – the common areas in the building, which are often calculated in relation to the amount of office space rented. When evaluating a doctor`s office, the lease is often considered one of the most important assets, as location is critical to the success of a practice and the lease is often one of the most important expenses. While a favorable lease can certainly increase the value of a doctor`s office, a lease can also be debilitating if the terms are not favorable.

Therefore, before entering into a lease agreement, it is essential to evaluate legal and business issues. Below, we`ve highlighted some important points that all healthcare tenants should consider before entering into a lease. Renting medical practices is complicated. Aside from the exhausting process of finding the right physical space for your practice, it`s hard to understand how this language can affect your practice when you finally have a lease in hand. A demo clause allows the landlord to terminate the lease if he decides to redevelop or demolish the building. This type of clause can be very difficult due to the ambiguous nature of the commonly used language, leaving tenants at the mercy of the landlord, who has the right to terminate the lease without the tenant`s consent. As you can imagine, an abrupt termination of the lease can have catastrophic effects on your practice. Different types of leases differ in the way prices are calculated. Commercial real estate leases can be divided into two main categories: gross and net. Gross leases include all costs, not net leases.

One type of rental that is becoming more and more common is the triple net lease. For example, if you`ve calculated the cost of financing an office space, including the improvements you may need to make to the building and your ongoing expenses, and you find that your final costs are about the same whether you`re renting or buying, buying the property is usually the best decision. If you own a building, you can accumulate equity over time and even spread your payments for building improvements instead of having to bear those costs all at once. Call it a hangover that has been in the works for a long time. Many medical practices that seized the opportunity to be leased by hospitals in a wave of transactions around 2008 now regret the terms of these agreements as they need to be renewed. This lease requires the tenant to pay property taxes, insurance and maintenance fees for common areas (CAM). Examples of CAM fees include things like landscaping, luggage racks, pest control, and elevator maintenance, and often expenses such as general utilities and operating costs are also included. Landlords determine these expenses based on the tenant`s proportionate share and incorporate them into the lease.

For example, if you rent 800 square feet of a 10,000-square-foot building, you will pay 8% of the cost of the building. 6. ensure the market value of hospital payments for the rental of the practice office and other facilities; If this sounds overwhelming, you`re not alone. For this reason, more and more doctors are turning to medical coworking as a convenient alternative so they can focus on their patients and the work they love to do. Imagine if a doctor`s office invested a lot of money in a room, only to find out that the owner rented the room next to a competitor in the specialty of the doctor`s office. If the doctor`s office has a particular specialty, a language must be added to the lease to ensure that competitors are not allowed to enter the building. Dennis J. Alessi is an attorney at the law firm Mandelbaum Salsburg and has more than two decades of experience representing various types of healthcare and related businesses, including management and billing service providers, surgical and imaging centers, medical groups, physicians and healthcare companies.

Send him an email here. Many of the agreements – which resulted in a full takeover – involved leasing the facilities and doctors from one doctor`s office to a unit owned by the hospital, usually another doctor`s office. These leases typically include specialized practices such as cardiology, urology, and gastroenterology. Recently, core service practices have also been targeted. 15. Similarly, the establishment of criteria, standards and/or parameters to be used in negotiations for the renewal of the lease to determine the payment of the lease for the operating facilities. If tenants are not careful, they may overlook provisions that may make the agreement unfavorable. For this reason, it`s always a good idea to ask a lawyer to review your lease before signing it. Sometimes, when a doctor`s office buys an office building, it assumes that it can cover the cost of the purchase by renting the additional office space.

While it certainly makes sense, the reality is that fulfilling a homeowner`s obligations can take time out of medical practice, making renting the space a bad decision. Instead of buying an entire office building, the best idea for doctors` offices is to buy an office condominium. This creates the space the practice needs without the need to manage an entire building. Not only is knowing these terms crucial to understanding your lease, but it can also help you filter out properties that may not be beginners. But since sifting through the details of legal documents isn`t what you came to medicine to do, we`ve selected eight terms to demystify the lease of the doctor`s office. 7. The ability to resume negotiations on lease payments during the term of the lease if certain triggering events occur (triggering events may include unforeseen costs of repairing or replacing medical equipment or personnel and support costs associated with admitting a new physician to the practice);. When assessing rent, potential tenants should consider their overall financial obligations. .

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