By Erica Pero –
No matter what your business is, Covid-19 probably threw a big wrench into things over the last few months. Maybe you don’t need as much space going forward. Maybe you need to spread things out to keep patient volume high. Maybe you’re looking to capitalize on the commercial real estate market now that everyone’s been thrown for a loop. If you’re currently leasing space, it’s likely that you’ll have to drag out that dusty lease document to figure out what’s what. Here are a few tips to get started:
- Note the “term” of the lease and any renewal terms. Maybe you had a five-year lease with one-year extensions. Where are you within that time period? Have you been there longer than the initial term? Less? However long you’ve been in the space will play a big role in calculating your next steps. If you’ve satisfied the initial term, it’s often easier to negotiate with the landlord.
- What is the “notice period”? If you decide to terminate the lease, how much time do you need to give your landlord before terminating the relationship? Maybe it’s 60 days, perhaps 120 – it’s important to note the notice period so you can provide written notice to your landlord that you’re terminating the lease in a timely manner.
- Can your business continue paying under the terms of the lease? Maybe you’ve decided to close up for good and buy a yacht. (No joke, someone told me this was the “new plan” last week.) Perhaps you want to break the lease early. Did you sign a personal guarantee for the lease? If so, even if your business goes bankrupt or closes, you may be personally liable for the remainder of the lease payments.
- If you’ve decided to sell your practice, you’ll need to make sure the landlord will allow you to assign the remaining lease to the buyer. Check for the “assignment clause”, which tells you what can/can’t be assigned and how. Also, if possible, make sure the landlord agrees to remove you from any liability with the buyer under the lease. (Landlords do not like to do this, but it’s worth asking.)
- Remember, even if you’ve signed a lease, EVERYTHING IS NEGOTIABLE. If you need to make changes, CALL your landlord and talk things out. Tenants forget it’s often much cheaper for a landlord to renegotiate terms with an existing tenant than to find a new one. Landlords are often willing to make things work to avoid the headaches of finding a new tenant.
Lastly, if you need assistance with any of the above, please reach out to your healthcare attorney.
Erica Pero, an attorney with Pero Law, focuses her practice on health law. She helps healthcare professionals navigate the complexities of running a business in today’s healthcare industry. Pero Law is a lean law firm committed to excellent customer service and exceptional legal representation. perolaw.com