Have you ever considered what happens when you miss your dental office lease renewal deadline or expiry date?
Timing is crucial, and letting your lease expire without a renegotiation or renewal plan can lead to a significantly negative financial hit to your practice.
Critical Dates to Be Aware of in Your Office Lease
The commencement date is an important starting point in terms of understanding the critical dates within your lease. In the case of a lease renewal, the commencement date should always be clearly stated. If you’re opening or starting a dental practice, the commencement date will usually begin after you take possession of the space, or when your landlord has completed the build out.
The dental lease expiry date is the next critical date to be aware of in your dental lease agreement. Being mindful of this date and negotiating your lease terms far in advance will work to your advantage. The length of most lease terms is typically five (5) or ten (10) years.
“Option to Extend” Expiration Date
The “option to extend” or “renewal” expiration date is the last day that you can exercise your option to extend the lease term. Dental professionals benefit from negotiating options into their lease because it provides flexibility for their practice in the future. Landlords view options as the sole benefit of the tenant, and therefore often place limitations as to when they can be used with deadlines.
Why You Should Never Miss Your Renewal or Expiry Date
If you accidentally miss your dental lease expiry date, you become a month-to-month or “overholding” tenant. This means that you’ve lost one of the most important protections that a lease agreement offers any practice: long-term security in the practice location. At this point, technically both you and the landlord have the right to terminate the lease by providing only thirty (30) days’ advanced written notice to the other party.
Imagine getting a letter in the mail today from your landlord stating that they are terminating your lease 35 days from now because they’ve decided to rent the space to someone else. As devastating as it sounds, this is a harsh reality that doctors across the country face on a regular basis.
Double the Monthly Rent
Allowing your lease to expire without a pre-planned renegotiation or renewal strategy may lead to a significantly negative financial hit. Many lease agreements state that as soon as you go past your expiry date, the landlord has the right to charge you twice the normal monthly rent for each month past the expiry date. We advise you to check the overholding clause in your lease as soon as possible to ensure you’re aware of what your penalty rent will be.
When to Start the Negotiation Process
If you have 24 months or less remaining on your lease, it’s critical that you begin to prepare your dental lease negotiation strategy now, plan the negotiation, and leverage the remaining time left to structure your lease properly. Your landlord knows very little about the business of dentistry, but what they do know is that as you get closer to the end of the term, you have less time to renegotiate properly. The less time available, the less leverage and control you have to negotiate a good deal.
Never Miss an Expiry or Renewal Date Again!
Review your lease today and identify your expiry date, and option to renew deadline. To help you keep track of your critical dates, Cirrus has developed a complementary Lease Date Tracking System. Simply fill in your dates and our system will notify you when it’s time to start thinking about your upcoming lease expiry dates. Track my dates now!
Achieving a good lease with fair and affordable financial terms requires extensive research, preparation, and a strong negotiation strategy. Don’t wait, be proactive, and track your dates!