What happens if you start your dental office lease renewal process too late, or you miss your lease expiry date, completely?
By allowing your lease to expire, you are putting yourself and your practice in harm’s way. Just like you’re an expert in the field of dentistry, your landlord is an expert in commercial real estate and leasing. With the help of their attorneys, they carefully engineer the terms in the dental office lease for their financial gain, and have the negotiation game down to a science.
Delaying the Negotiation
Your landlord knows that your dental office is an expensive and difficult-to-relocate business, which they use to their advantage. Generally, the landlord will stall meeting with you in hopes of delaying the lease negotiation process for as long as possible. They know that the closer they get you to the end of your term, the less leverage you have to negotiate a good deal or relocate. Essentially, they have you right where they want you.
Towards the end of your term with time running out, they will encourage you to focus on the issue of rent, a diversionary negotiation tactic intended to prevent you from dealing with other key issues hidden in the office lease.
Penalties for Missing Your Office Lease Expiry Date
If your lease expires, you are a month-to-month or “overholding” tenant. This is a highly vulnerable position to be in with zero negotiation leverage, subject to expensive penalties in the lease set forth by your landlord.
Lease Termination
When you are in “overholding”, your landlord can terminate your lease any time with only 30 days’ advanced written notice. Imagine having to exit your practice with only 30 days to find a new location and re-build your entire business from scratch; sounds expensive.
Your Monthly Rent, Doubled!
The “overholding” clause in your lease may also give your landlord permission to charge you double your monthly rent. Imagine getting hit with double your monthly rental fees, in addition to all of the other costs associated with running a business.
In both of the above expensive and unfair scenarios, your landlord is in the power seat. They will serve you with a less-than-favorable new lease that gives them many unfair advantages, like the right to practice sale proceeds, relocation privileges and more. Caught between a rock and a hard place, you will probably sign the lease as is rather than facing potential eviction or double the rent.
Prevention & Protection
Begin the lease negotiation process 24 months in advance of your dental office lease expiry/renewal deadline to prevent you landlord from gaining an unfair advantage. This will ensure that you have more than enough time to plan a proper negotiation strategy that is based on your objectives and not driven by desperation.
Thoroughly review the details in your dental office lease to highlight important dates, risks and problem areas in advance. Keep track of critical action dates like your lease expiry and “option to renew” deadline.
The Tenant Lease Cycle to the left illustrates the ideal 24 month timeframe that a dentist should allocate to safely plan their dental office lease renewal negotiation strategy.
Achieving a good lease that provides protection and affordable financial terms requires extensive research and the time to properly prepare. If you have 24 months or less remaining on your lease, start planning your negotiation strategy today.
Want Help Tracking Your Dates?
Enter you expiry/renewal deadlines into Cirrus’ Lease Date Tracking System and a leasing expert will notify you when your lease is within the 24 month window of your deadline to ensure you start the negotiation planning process on time.
About Cirrus
Cirrus is the preeminent leader in dental office lease negotiation services across North America. No other firm has a wider reach and more specialized focus than us. With over 100 years of combined experience, the Cirrus team has successfully negotiated over 10,000 dental office lease agreements, saving our clients over $11 million in rent since 1994.
Our experts analyze the lease for important dates, identify potential problem areas and risks, and develop a lease improvement and negotiation strategy to help doctors achieve fair and equitable leasing terms.
Sign up for a personalized dental office lease consultation with a Cirrus expert!
