Very often, the relocation of a medical office, and the subsequent negotiation and execution of a new lease, follows a well-defined pattern. After a certain amount of searching, one day a realtor shows you the perfect space, in the perfect location, and assures you that the lease will need to be signed as quickly as possible if you are not to lose the space to one of your competitors.
Health care providers create special leasing issues. Among other things, health care providers work with chemicals, they produce biomedical waste, their patients have a greater need for privacy and are more likely than the general public to be disabled. For both the landlord and the tenant, the boilerplate language in most general office and retail leases fails to address the special characteristics of medical tenants. This article generally identifies some of the most common inadequacies.
While there is no substitute for the representation of experienced legal counsel when entering into a new medical office lease, understanding some of the most significant provisions in a lease will serve you well when undertaking the initial review of a “form” lease with which your broker has presented to you. Having a little understanding of the implications of the key legal provisions can save you a lot of money in the long run. The following is the first part of a brief checklist of some of the most commonly encountered provisions and a brief explanation of the potential implications of each.
Yet health care providers may seek specialists to finish the leased premises. The landlord may acquiesce to allow the tenant finish work to be done by contractors with whom the landlord has no prior relationship
Since many office leases contemplate that the landlord will hire the tenant finish contractors, the language in those leases often doesn’t address construction problems. A precise construction plan should be agreed to in advance.
As a result, a tenant with a May 1 rent commencement date may find that, due to construction delays, the space is not ready for occupancy until May 5, but the landlord nonetheless bills the tenant for rent retroactively to May 1. Further, if the lease simply states that the rent commences on May 1, the landlord is legally entitled to collect rent from that date. It is therefore incumbent upon the tenant to make sure that the lease provides that rent will not commence until the landlord’s work has been completed and, ideally, the tenant has been afforded a day or two thereafter within which to take occupancy.
Virtually all leases have provisions obligating the tenant to behave in a way which prevents mechanics liens from attaching to the property. These provisions should be reviewed to verify consistency with tenant control of the finishing At the end of the lease, the landlord is more likely to demolish the specialized health care tenant finish than with more classic office or retail tenant finish.
As health care providers seek to become increasingly convenient to their patients, they will continue to migrate to general office and storefront retail space. Both landlords and medical tenants need to work to ensure that their leases fit these special situations
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