You put your practice on the market, found a buyer, negotiated a proposal, and signed a purchase agreement. A win-win for the buyer and seller. But wait, the landlord must agree to the whole deal?
Yes, as frustrating as that sounds, a totally uninvolved 3rd party must consent to your lease being assigned to the new practice owner. Worse yet, this 3rd party has almost no motivation to do anything to help you and the buyer.
Lease Assignments are Legally Required
If you are leasing your practice’s space, this scenario is an unfortunate reality. The lease you entered into all those years ago gave your practice the authority to occupy the landlord’s space and provide dental services from the landlord’s property. In order for anyone else to occupy that same space, the lease must be transferred, or “assigned”, to the new owner of the practice. Otherwise, you can sell your practice, but the buyer will not be able to legally practice within or on the Landlord’s property without that right being conveyed through the assignment of the lease agreement.
Requesting a Lease Assignment from Your Landlord
So how do you go about getting your landlord to agree to have a stranger take over your lease obligations? The first place to look is at your lease. Typically, how to request an assignment is outlined in your lease. Not all leases will grant you the right to assign, and in fact, some leases may strictly prohibit assigning the lease. Whenever reviewing a legal document, it is always wise to consult with an attorney, preferably the same attorney that reviewed your original lease.
Once you understand what exactly the requirements of an assignment request are, you should reach out to your property manager. The tricky part is that your property manager is likely a 3rd party servicer of the landlord meaning they do not work directly with the landlord but act as their agent. This is where the drag on time will really come into play. Assuming you have a good property manager, and, maybe most importantly, one that likes you, they will reach out to the actual ownership team.
Getting the Landlord Comfortable With Assigning to Your Buyer
From here, your landlord (read actual owners) will want to know if the buyer is financially capable of taking on your lease obligations. They may require extensive financial disclosures from the buyer. The assignment request review period could take weeks, all the while you are either a) not transferring ownership of the practice or b) hoping the landlord approves the assignment so that all this time you spent negotiating the sale is not in vain.
You May Still Need to Guarantee the Lease
In the event the landlord does approve the assignment, you will likely be required to stay on as a sort of personal guarantor for some period. The final step is the execution of a lease assignment between you and the buyer and then also a landlord’s consent to the lease assignment.
You May Need to Be a (Friendly) Squeaky Wheel
All in all, getting the assignment request approved and executing these documents could take weeks if not months as many landlords just don’t see this as a priority when they have a perfectly capable tenant (you) already on the hook for the lease. Your best hope for a speedy resolution of the issue is to lean on your property manager to get the process done quickly. Otherwise, you may find your practice sale falling apart.