Medical Office Sublease Agreement

A medical office sublease agreement contains special provisions that reflect the unique circumstances involved with the medical profession. As a result, physicians often create special medical office sublease agreements to address issues such as the treatment of biomedical waste and hazardous materials, maintaining health code safety standards, and keeping patient records confidential. You should, therefore, be prepared to negotiate the lease to receive favorable terms to protect your practice, employees, and patients.

However, because it is a sublease, and you are not dealing directly with the owner of the property, you should take extra precautions and do your best to understand the elements of a standard sublease agreement. Make sure you are not violating any provisions of the lease agreed to between the party you are entering into the agreement with and the owner of the property. As a subtenant, you may be held liable for any damages resulting from a violation of the terms of the original lease.

Everything Is Negotiable in a Medical Office Sublease

Standard sublease agreement forms often contain boilerplate language that, while common in most commercial leases, does not reflect the unique aspects of medical practice. Avoid the temptation to sign the lease without taking the time to sit down with your landlord to discuss the special characteristics that distinguish your tenancy requirements from most other businesses.

In fact, you should consider consulting an attorney experienced in commercial lease agreements before entering into a medical office sublease agreement. It’s typical for most medical office leases to require a multi-year commitment on your part, and you don’t want to be stuck with an agreement which you’ll regret a year or two down the road.

Leasehold Improvements

An item in medical office leases that you (or your attorney) should pay particular attention to is language regarding leasehold improvements made to the premises during your tenancy. A medical practice typically involves the installation of unique equipment or remodeling to accommodate unique aspects of medical supply storage. There are typically two approaches taken:

  • It is the responsibility of the tenant to remove all equipment installed during the tenancy and, if alterations were made to the space, the property should be restored to the condition that existed before the lease was signed.
  • Any and all equipment installed during the tenancy becomes the property of the landlord and the tenant is not reimbursed for the cost of any renovations or changes made to the property.

As you can imagine, there are potential drawbacks to either of these approaches. Therefore, it might be more beneficial for a medical office lease to allow you to remove specialized equipment that your practice has purchased or installed and that you will provide reparation for any alterations made to the premises.

Basic Services

Many standard commercial leases stipulate exactly what basic services, such as utilities, a landlord pays for and which services the tenant is responsible for. Therefore, you would be mistaken to assume that the landlord will provide any services beyond those that are legally required by the lease.

A case in point might be electric bills. Medical equipment might have greater electricity consumption many other commercial interests. The landlord may not be willing to pay more for electricity than is covered with your monthly rent. This is understandable.

However, if your landlord determines to charge you for your electricity usage each month, you should request that a separate meter be installed so you can monitor your usage and benefit from any steps you take to become a more energy-efficient operation.

Another example might be dealing with waste disposal. As a medical practice, you may be required to comply with certain health or environmental regulations that are not typically addressed in a standard commercial lease trash removal clause. The landlord may not be obligated to pay for the extra cost for regulatory compliance. An arrangement might be negotiated where you as the tenant pay only the extra cost above what the landlord would typically pay for waste removal services.

It’s important to understand that a medical office sublease agreement is essentially a contract, and like any contract contains terms and provisions that can be negotiated. Take the time to review and understand your medical office lease.

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