Our lawyers supported signing of lease on a dental clinic
A client - natural person – retained services of our law firm in July of 2018. He was going to open a dental clinic in the near future. The client was at the negotiation phase for tenancy at the moment of contacting us. The location he wanted corresponded to a business model of the client completely, but a number of issues arose in the course of communicating with the owner which alerted him. For instance, the owner of the premises did not want to sign a contract directly, but instead insisted on using an intermediary agent, actually offering a sublease to the client. Moreover, the lease price for the premises changed constantly as they were quite interesting and the owner could not determine exactly, how much he wanted for the location.
Since the premises were without the renovations, our client understood the necessity of investment in the construction works and installment of special equipment. Some of the inherent changes (which cannot be detached from the premises upon completion of the lease) were valued at $ 20,000. The client needed a good contract, which would protect him from the increase in rental rates, early termination and other risks as well as would allow him to recoup the investment within three years.
When discussing the form of the contract (notarial or simple written form), we explained to the client that the former is required only if the term of the contract exceeds 3 years. Otherwise, the notarial form of the contract does not create any additional guarantees in comparison with the simple written form. At the same time, the notarial certification of signatures in the contract will cost a substantial sum. The client made a decision to arrange a three-year contract with the prevailing right to extend it.
Another important issue was to protect the investment in case if the contract would be for any reason terminated earlier than in three years. We know that such guarantees have two aspects: legal and practical. The contract must stipulate the essential provisions which regulate the liabilities of the landlord to refund the improvements virtually in all cases, except those arising from the fault of our client. But this is not enough: considering the presence of the intermediary agent in the situation, we proposed to additionally sign a contract of guarantee according to which the owner of the location would be liable for performance of obligations by the agent. This is a guarantee de facto - ensuring the recovery of future awards won in court at the expense of the owned premises.
The third circumstance was the wish of the client not to pay the lease until the completion of improvements and obtainment of medical license, which was supposed to be achieved approximately by December 1. We recommended entering into an accessory sublease contract, as in addition to the deferred payment, both parties wanted to conclude the principal contract between the different parties: our client was supposed to register an LLC, and the intermediary agent was supposed to become a sole proprietor on a self-employment tax.
After approving all the details with the client and preparation of the draft of accessory lease contract, our lawyers accompanied the negotiations stage, since the conclusion of contracts is often failed precisely at this stage - most people do not like and cannot discuss the possible negative consequences. At the same time we understood that our client is very interested in the location and we should not allow protection of his interests to interfere with the signing of contract.
The negotiation process was taken care of as delicately as possible. Within its course we showed the intermediary agent his interest in the contract of guarantee and closed the deal by signing the preliminary (accessory) lease.
Legal support for business processes requires not only legal knowledge, but also an understanding of the ultimate purpose of all the involved actions. We are constantly improving in both in order to provide the clients with maximum benefit from our consultation and representation of their interests.
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