Dental Office Lease Review: Key Terms to Check Before You Sign

For most dental practices, the office lease is the largest financial commitment after payroll — and one of the most overlooked. Whether you are signing your first lease, renewing, or relocating, the terms you agree to will affect your financing options, your ability to sell the practice, and your personal financial exposure for years.

Before you sign, review these key provisions carefully — ideally with an attorney experienced in healthcare and commercial leasing.

Assignment and Change-of-Control Clauses

Your lease should allow you to assign it to a buyer if you sell your practice. Many landlords require their consent for assignments, which is reasonable — but the lease should state that consent will not be unreasonably withheld, conditioned, or delayed.

Watch for change-of-control provisions that treat a practice sale as an assignment even in a stock sale or merger. If you plan to sell one day, restrictive assignment language can delay or derail your transaction — or give the landlord leverage to extract concessions at closing.

Renewal Options

A dental practice's value is closely tied to its location. Renewal options give you the right — but not the obligation — to extend the lease on pre-negotiated terms. Ideally, secure multiple renewal terms (for example, two five-year options) with clear procedures and deadlines for exercising them.

Just as important: make sure renewal options transfer to a buyer. A practice with ten years of secured occupancy is worth more than one with eighteen months left and no renewal rights.

Personal Guarantees

Landlords frequently ask the practice owner to personally guarantee the lease. A personal guarantee makes you individually liable for rent and other obligations if the practice entity defaults.

Guarantees are often negotiable. Depending on your leverage, you may be able to limit the guarantee to a fixed dollar amount or time period, add a "good guy" guarantee that ends when you vacate and pay through surrender, or eliminate it entirely in exchange for a larger security deposit. Understand exactly what you are guaranteeing before you sign.

Exclusivity

An exclusivity clause prevents the landlord from leasing space in the same building or shopping center to a competing dental practice. For a dentist investing in build-out and goodwill at a location, this protection is valuable.

Negotiate the scope carefully: define what counts as a competing use, how large the restricted area is, and what remedies you have if the landlord violates the clause. A vague exclusivity promise is difficult to enforce.

Relocation and Demolition Clauses

Some leases give the landlord the right to relocate your practice to different space or terminate the lease if the building is demolished or substantially renovated. For a dental office — with expensive plumbing, electrical, and equipment installations — a forced move can be devastating.

Try to remove these clauses or narrow them significantly. At a minimum, require the landlord to pay your relocation and tenant improvement costs, provide comparable space, and give lengthy advance notice.

Tenant Improvement Allowances

Tenant improvement (TI) allowances are funds the landlord contributes toward building out your space. The lease should specify the allowance amount, what it covers, the disbursement process and timeline, and what happens to any unused funds.

Because dental build-outs are among the most expensive in commercial leasing, the TI allowance is often a major point of negotiation. Coordinate the lease negotiation with your contractor's estimates so the allowance reflects real costs.

Your lease is a long-term strategic document, not just a monthly rent obligation. Having it reviewed before you sign — and before each renewal — protects the value you are building in your practice. Mostofi Law Group represents dentists and dental practices in lease negotiation and review throughout California. To discuss your lease, call us at 1-866-247-9420.

This post is for general information only and is not legal advice. Every situation is different — consult a qualified attorney about your specific circumstances.