10/13/2014

Contracts for shared dental space agreements


Subleasing space in a dental practice has become a popular trend for young dentists looking to test out success rates in specific geographical areas and cut down on their expenses until they get to a point in their careers when they can build out a dental office or purchase their own practice.

There are different ways to classify this type of business agreement. The dentists involved can both be on a main lease and have separate practices within one space or one dentist is on the main lease and subsequently enters into a shared space agreement/sublease with another dentist. "Shared space" agreements can get quite complex, and in these agreements, it is important for the dentist on the lease (sublessor) and the dentist who wants to use the space for a limited period of time (sublessee) to make sure the proper written agreements and consents are in place.

Typically, a dentist will have a lease in place with a landlord and a second dentist will want to utilize the space and/or a portion of the space for a certain fraction of the week or month. In order for the sublessee to utilize the space, a written consent from the building's landlord must be obtained. As a result, the dentist on the lease (the sublessor) must get written landlord consent prior to entering into a sublease arrangement with a dentist who wants to use the space for a limited period of time, according to Sherry Mostofi, a California attorney who handles the legal aspects of such business arrangements between dentists.

In addition to landlord consent, Mostofi said an agreement between a sublessee and sublessor should be in place and be delineated in writing to protect both parties.

"An agreement between the dentists should be drafted and include aspects such as adequate notice provisions, right to utilize supplies and equipment, each party's obligations in terms of maintaining separate phone lines and how to arrange shared employees," Mostofi said.

The amount of time each party will require for written notice to terminate the arrangement is an important aspect of the agreement. The sublessee should note that if alternative space is not available upon the termination of the arrangement, then they must have adequate notice to complete treatment for patients at the subleased space and provide emergency care in order to avoid patient liability.

"Let's say the sublessee wants to see patients twice a week; the agreement between the sublessor and sublessee should specify this arrangement to protect the sublessee with regard to use of the space. Legally, the sublessee is liable to the patients under treatment and legally he or she has to have a place to complete treatment for them," Mostofi said.

Both dentists must have an understanding of what supplies in the practice can be shared and how they are paid for. Mostofi said it can be a daily rate or built into the monthly rent payment, but the sublessee may want to use supplies such as gloves, syringes and bleaching kits - and determining how this is going to be paid for upfront is important.

The sublessor and the sublessee should also not share one telephone number, according to Mostofi.

"The sublessee should obtain a new number that is affiliated with just the sublessee's practice because if the arrangement between the parties terminates, each party will want to have a distinct number for their respective patients," Mostofi said.

The dentists also should maintain patient records separately as each dentist has a distinct practice within the space. The agreement between the parties should establish that each dentist is a custodian of his/her own patient records and that solely the patient records of the sublessee are removable by the sublessee upon the termination of the agreement.

Mostofi stressed the importance of making sure the sublessee has an exit strategy in place.

"Generally, a sublessee should have plans in place about subsequent steps if or when the space sharing/sublease arrangement ends," Mostofi said. "It can take several months to build out a dental office and in many areas, medical or dental properties are scarce."

For more guidance on such agreements, contact CDA Practice Support at 800.232.7645.



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