Dental Lease “Use” Clauses Can Grow or Cripple a Practice

A “use” clause is a term in a dental lease agreement that defines how a provider can use the leased space. In other words, a use clause defines the activities one can undertake and what services one can provide in a leased space. A use clause will typically also define the landlord’s control over the use of the leased space and the consequences for failing to abide by the use clause. A use clause typically works together with an “exclusivity” clause.

Despite its importance, use language is often overlooked by tenants because tenants don’t think it has as great an impact as it does, or tenants don’t seek legal advice and come to understand its significance. As a tenant, it is critical to review use language. A broadly defined use clause can facilitate the growth of a dental practice. Whereas a narrowly defined use clause can cripple it.

Consider: You are a general dentist who has offered general dentistry services for many years. You see an opportunity to grow and expand your business by adding and providing new services. You’ve decided that you want to bring an orthodontist and cosmetic dentist into your practice so that your business can be a one-stop shop.

Which use clause will allow you to grow your business? Which use clause will stop you from expanding?

  •  “for oral health and any and all other related activities”


  •  “for general dentistry only”

If your lease contains the second clause, your opportunity for expansion is severely limited. And, if you choose to expand your services anyway, your landlord could terminate your lease and seek damages for breach of contract, depending on the lease terms.

The moral of the story is: Don’t underestimate the importance of the use clause in your dental lease!

Positioning Your Dental Practice for Sale

Thinking about selling your dental practice is a major career step which cannot be treated lightly. It is imperative to not only stay in step with all the legal practices and procedures to protect against liability issues down the road but also to ensure that you get the most profit possible from the business you’ve worked so hard to create. The process of preparing your dental practice for sale should start months in advance so you can address any issues early and prior to having a purchase agreement in place.

Know the Cost of Selling Your Dental Practice

Before you begin the process of putting your dental office up for sale, it’s a good idea to know all the costs involved. Speaking with your accountant to better understand the tax implications and how to manage equipment issues, unsold goods, employee transfer, and more can help you determine when might be the right time to sell. In some cases, it may be prudent to postpone a sale by a few months or years to get everything in place. You should also meet with a practice consultant that can help re-organize the practice and its flow. An experienced healthcare business attorney can help restructure corporations, contract key employees, prepare a fair market value lease agreement, and even begin to draft key terms for the sale.Continue reading