Is there a Doctor in the Property?

We have represented both landlords and tenants with respect to commercial leases.  This post will examine the particulars to be considered when a doctor or medical practice is the tenant.

When evaluating a potential location, the proposed tenant should first determine whether the space is compliant with the Americans with Disabilities Act (“ADA”).  For instance, if the building has steps to its front entrance, is a ramp also installed to allow for wheelchair access?  Is there an elevator and if so, is it also suitable to be used by patients with wheelchairs.  Do the restroom facilities comply with ADA?

In the event that the space is not ADA compliant or requires adjustments to be suited for the installation of medical equipment, the parties may decide that the space will be built out before the tenant occupies.  The parties will decide which one of them will be responsible for the build out costs and whether the tenant will be afforded a rent concession until such time as the space is completely constructed and ready for use, provided that the tenant exercises diligence in completing the construction, in accordance with building permits to be obtained and without the attachment of mechanics liens to the property.

Medical professionals may have specialized medical equipment required for their practice.  Such equipment may have use specifications such as load bearing requirements, temperature controls, electric capacity and space limitations.  The tenant should carefully consider whether the proposed space is suited for the medical equipment that is integral to the doctor’s practice.  Also, it should be provided in the lease that the equipment belongs to the tenant and can be removed by the tenant when the lease ends.

Once the tenant has located the space and negotiated deal terms, the landlord or his attorney will present the proposed lease for review.  Given the sophistication required to review and negotiate leases and their typical lengthy term, the medical professional should have an experienced attorney review the lease on his behalf.

Landlords may be concerned with the potential use of the space, in that medical offices as the stated use may be too broad.  A limitation on the specific type of medical practice to be conducted may be desirable for landlords.  For instance, a landlord may want to prohibit use of the premises for drug and substance abuse rehabilitation services or for the distribution of methadone.  In a multi-tenant building, the landlord may prohibit the doctor’s visitors from congregating in the building’s common areas and may request that visitors promptly enter the doctor’s office suite.

Parking may also be a matter to be negotiated between the parties.  If possible, it may be best if the parties agree that a particular number of parking spaces be designated for the doctor’s visitors, so that other visitors to the building can also readily locate a parking space.

Hazardous waste is a matter of concern to all landlords.  Most commercial leases prohibit the generation of hazardous waste and require the remediation of the results of hazardous waste.  Medical offices also likely generate medical waste.  An additional provision with respect to medical waste should be included in a lease of medical space.  Likewise, the tenant should be required to maintain extermination services to eliminate potential critters attracted to the medical office.

It is not unusual for a medical office to be shared with independent contractors and members of the doctor’s medical practice group who collaborate with the doctor.  The tenant’s attorneys may request that such ancillary use does not trigger the sublease requirements of the lease.

Most leases are signed by an entity such as a limited liability company (“LLC”).  Savvy landlords will request that the lease be guaranteed by the principal of the LLC, such as the lead doctor.  That way, the guaranty will provide that other assets of the doctor may be available should the LLC default on the lease.

We are fluent in matters of concern to both landlords and tenants as parties to medical and other types of commercial leases and welcome your inquiries.