Medical Office Lease Agreement

Home » Agreement Articles » Medical Office Lease Agreement

Medical Office Lease Agreement

A Brief Introduction About the Medical Office Lease Agreement

Medical office lease agreements refer to a unique kind of lease agreement which are meant solely for medical establishments. Over time one can observe that medical establishments usually stay on lease for long term duration as they seek to establish their presence in the local community amidst brutal competition with other likewise medical establishments in the vicinity. While looking for a property for a medical establishment, it is certainly beneficial if one hires the services of a real estate broker. The broker will find a suitable property that could be taken on lease fitting your budget and other ancillary requirements that you may have in mind while hunting for a location.

While it may be debatable whether to buy the property or lease it for a medical establishment, it is generally advisable to stay on lease for the starting few years till the medical establishment has become reasonably popular in the area. Once it has reached this level, one can consider buying it. It should be noted that buying a property will be a one-time investment. Beyond that, after ownership, since you are the rightful owner of the property, you will be expected to pay for maintenance, etc. Commercial property rates are volatile, and one may be put at a disadvantage due if the price appreciates very rapidly, thereby making the investment proposition beyond budget.

Purpose of Medical Office Lease Agreement

Medical office leasing is a unique form of the lease that has a different medical office leasing template, which is used for leasing. The agreement primarily establishes an understanding between the medical healthcare practitioner and the landlord concerning the said property. It spells out the rights and obligations of the landlord and tenant towards each other. The terms mentioned in the agreement are legally binding and need to adhere at all times.

How to Draft of Medical Office Lease Agreement?

There is a given limited number of templates followed for medical office lease agreements. This agreement being a legal contract, requires special attention. One should get the agreement reviewed by a lawyer before signing the dotted line. It is possible that the landlord would have used a standard agreement for a letter, and therefore it would miss out on the clauses that are needed in this kind of agreement. Before drafting the agreement, you must negotiate a suitable price with the tenant since you would be leasing the property on a long-term basis. One should always keep your interests in mind and ensure that they are well covered within the lease agreement.

Contents of Medical Office Lease Agreement

Medical office lease agreement usually covers a few standard points as mentioned below-

  • Landlord’s details
  • Medical establishment details
  • Address of property
  • Term of lease
  • Rental costs of the lease
  • Terms and conditions of rental such as maintenance, indemnification, etc
  • Signatures and declaration of both parties to the agreement, namely the landlord and medical establishment.
  • Estoppel clause
  • Surrender related terms
  • The notice period for vacating premises
  • Security deposit amount and details on the refund

It is pertinent that the medical office lease agreement is crisp and comprises of all legal terms relevant to the said agreement.

How to Draft the Medical Office Lease Agreement

Zonal factors – It is essential that the medical establishment is well within government-mandated zones and does not fall into a zone not legal for medical establishments

Existing leases – It is essential that while signing the lease agreement, it is seen that it does not state in spirit or letter something which would be seen as violating the rights of tenants who are part of the property. For example- it may be possible for another medical establishment existing in the location which, as per their agreement has exclusive rights to provide any child healthcare services at the location. This information on existing leases and their clauses is available with the landlord.

  • Requisite approval – The agreement should not in any sense, violate the zones set out by lender for retail and non-retail.
  • Regulatory and licensing concerns – The prior approvals should be taken before establishing a medical facility. These would be approvals from the local health council, safety standards, etc.
  • Design changes – To effectively deliver medical services, it may be necessary for the medical establishment to undertake design changes within the property. So, these matters must be agreed well before between the landlord and establishment
  • Environment concerns – A medical facility may have toxic, radioactive materials, biological and medical waste, etc. The onus of the environmental liability related to their property lies in the medical establishment. The landlord may choose to inspect the premises to ensure that environmental laws are being complied with.
  • Premise uses – It may be possible that the establishment requires services of other people or diagnostic unit which it may choose to establish within the premises. It should be mentioned in the agreement, so there is complete transparency.
  • Termination – The medical establishment should review clauses related to the termination of the deed so, it is aware of its obligations post completion of the leased term.

Negotiation Strategy

The medical office lease agreement has a fairly simple structure, which is easy to adapt to all. Beyond this, while negotiating with the landlord, it is critical that one protects your interests and also considered the tenant’s interest to ultimately have a mutually beneficial agreement.

Benefits and Drawbacks of Medical Office Lease Agreement

Benefits

  • Acts as an official proof of record for leases between tenant and
  • It can be used to clear disputes in the future.

Drawbacks

  • The legal burden for both the parties
  • Additional costs to bear for obtaining a marriage license
  • Delay in marriage due to the additional time it takes to receive the licensed post submitting a requisite application. Only in some jurisdictions issue marriage license instantly. The rest of the jurisdictions take anywhere between a week or more to issue the document, which gets posted to your registered address.

As explained, medical office lease agreements involve a lot of complexities compared to a traditional lease agreement. However, with sound guidance and attention to detail, one can navigate the legal terminology and ensure a proper lease agreement is made, which satisfies both the parties involved.