After an unsuccessful lease negotiation attempt was made between a dentist and landlord, the dentist reached out to us to help. We often get called to be a mediator in negotiations when they do not go right. Our dentist client had signed a lease without understanding what they needed to increase the value of the practice given they were planning to sell. The lease had assignment and demolition clause issues, and an unfavorable term length for financing. These clauses hurt the valuation, and the business brokerage and the dentist informed us that they needed us to fix the issues. Smart move.
The dentist thought that having a lease along with a few helping clauses such as options to renew was the only thing they needed in securing a great deal. In fact, they did not know how important the lease was to an incoming dentist buyer in providing long term security for the leased premises.
Our client had tenanted the building for a very long time and had no reason to believe the landlord was being malicious as they had a great relationship, nor did the landlord understand how important it was to the dentist that they have a presentable lease with favourable conditions for the sale of the practice. When negotiations broke down and the dentist realized this was not atypical lease they needed, they called us in. Given the complexity of the issues at hand, smart move as our experience is deep with this exact situation. We have seen them repeatedly.
How Did Negotiations Go?
During our negotiations, the landlord became frustrated with a request to remove a demolition clause contained in the lease and would not strike it out or extend the time to a much later date. Pushing out the demolition clause provides security any proposed buyers will be seeking to protect their new investment purchase.Buyers shy away from demo clauses due to this and it hurts the salability of the practice.
How Did Negotiations Go?
Although the negotiations were tense, each party offered each other what they needed by giving something up. The most important thing when beginning a negotiation is to set the tone right away. Positivity is key to engaging someone or an entity in getting what you want or need. Knocking on the door is much better than crashing through it as often, stringent demands as your first position in negotiations often leads to a breakdown of good faith.
The dentist got what he needed for his valuation and sale of his practice, and the landlord was compensated for their demolition clause among other things. Both parties stand to benefit, and this is the essence of GREAT negotiations. It would be scary to think what the outcome would have been for the dentist and landlord if Realty Lease Consultants did not create the framework for both parties to claim success.
The best course of action is to call us before you begin negotiations so that your starting position is clearly defined, and discussions begin on a positive note. We act as a buffer in between you and the landlord in aiding your success at your practice with a solid lease.