The Role of the Title Agency in a Practice Sale Transaction

When it’s time to sell your medical practice, and you own the land and/or the building on and through which you run your practice, a healthcare business attorney will ensure that you understand every part of selling your practice and the terms of the sale are fair to you. They will also draft all the related legal documents. Just as you should use a healthcare business attorney to understand all the legal implications of selling your practice, you should use a title agency to ensure that the sale of your practice actually goes through. Unlike many other states, Florida allows an attorney or a title agent to act as a closing agent for the sale of your practice. Therefore, you have the option of using a title agency operated by real estate law attorneys experienced in title or title agents.

The Role of the Title Agency

Title agencies have two main roles: (1) conducting a title exam; and (2) issuing title insurance.

When a title agency conducts a title exam, they research who owns the real property for sale, the physical boundaries of the real property and whether the property is encumbered by any outstanding mortgages, liens or other encumbrances, such as unpaid real estate taxes or mechanics liens. If the real property is encumbered, a title agency will assist you in paying off those unpaid real estate taxes or mechanics liens so that title is clear and there are no third-party claims to your property. Most of the time, any issues that arise during a title exam can be resolved, and often without delaying closing. However, where a significant issue or issues cannot be resolved, the buyer will likely walk away from the deal.

After conducting a title exam, a title agency will sell the seller and the buyer title insurance. Typically, the seller pays the title insurance premium for the buyer and the buyer pays the title insurance premium for their lender if financing is required. Title insurance protects the buyer and lender in the event a third-party claims that they have some sort of ownership interest in the property after the sale goes through.

Selling a Medical Practice

Buying and selling a property is often the most financially significant transaction an individual undertakes. The bottom line is that using a title agency can save both the seller and buyer unnecessary headaches in the long run.

Negotiating an Exclusivity Clause in Your Dental Lease

Consider: You found the perfect plaza to open your dental practice. On move-in day, you find out the vacant space next to yours has been leased. Turns out, it’s a competing dental practice. The practice puts large banners in the windows, directs traffic towards its space and offers specials for new customers. Where does that leave you and your dental practice? If your lease doesn’t contain an exclusivity clause, you’re out of luck.

Before you sign a lease for your dental practice, try to negotiate an “exclusivity” clause. An exclusivity clause is a provision in your dental lease agreement that can prevent competitors from leasing space in the same complex. Without one, a competing dental practice could run right next to yours, potentially taking away current clients and redirecting potential new clients to itself. An exclusivity clause typically works together with a “use” clause, which you can find more about by clicking here.

You’ll find that many leases do not include exclusivity clauses. That is because landlords typically only agree to let powerful tenants negotiate an exclusivity clause. If such is the case, don’t give up! You may still have the option to propose a more specific, less restrictive exclusivity clause. For example, instead of asking for an exclusivity clause that restricts all other dentists from leasing space, try to negotiate for an exclusivity clause that restricts only a competing specialty.

In addition to ensuring that an exclusivity clause is contained in your dental lease, your lease should impose severe consequences on your landlord if they breach the exclusivity clause. Most likely, allowing you to terminate your lease and vacate the premises won’t be the ideal option, as doing so can cause you to have to put your business on hold and incur significant unexpected expenses. For example, you may have to undertake market research for a new location or pay increased rent. To better protect yourself as a tenant, ensure that if your landlord breaches the exclusivity clause in your lease, you will receive a significant reduction in base rent, among other things.

Article prepared by: Amanda Howard