Dentaltown April 2020 - 90

Make-good provisions
Make-good provisions are such a common issue that they're actually colloquially
referred to as "dentists' clauses." Because
of this, it's essential to know what you're
talking about when you negotiate a makegood clause.
In this clause, the landlord stipulates
in what state the tenant must leave the
office at the end of the lease. Essentially,
the landlord tells you what condition they
want their premises in once your lease is
up, and you have to pay for the necessary
work to get it done. A common make-good
clause would be for the tenant to return the
building to its original condition, or even
to strip it down entirely.
Obviously, this is a costly thing to agree
to, especially if you're going to be making
major changes to the building when you
move in. Make-good clauses can end up
costing tenants anywhere between $5 and
$10 per square foot. If you're trying to exit the
building, this can be a massive expenditure.
What can you do about the make-good
clauses? Sometimes, all you have to do is ask.
Some landlords will eliminate the make-good
clause entirely if it allows them to sign a
tenant for a long-term lease. If this is not
the case, however, there are still some steps
you can take to reduce the impact that a
make-good clause will have on your business:
Agree on a maximum total expenditure.
If the landlord won't eliminate the clause, try

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to get them to agree on a maximum amount
of money that you'll be required to pay.
Only agree to undo the tenant improvements that you make. This is where a lot
of businesses can be unfairly affected by
make-good clauses. Depending on the
wording, you may have to undo not only
your leasehold improvements but also those
of all the businesses. To eliminate the odds
of this happening, alter the agreement so that
you only have to return the premise to the
condition that it was in when you moved in.
Have a condition report done before
you move in. This document outlines the
current state of the building, including
any existing damage or alterations that
have been done. Having a condition report
gives a clear idea of what modifications (or
damage) have been done by your business,
so there are no disputes between you and
the landlord when discussing what work to
you need to pay for.
Avoid having to pay several months
after the fact. Many make-good provisions
don't always stipulate when you need to pay
for the modifications, and businesses can
be required to pay up months after they've
moved out. To avoid this, ask your landlord
at the end of the lease if there's any work
they wish for you to do. If they say no, ask
for them to release you entirely from the
make-good provision.

Assignments and sublets
Assignments and sublets are clauses
that allow you to transfer your leasehold
obligations to a third party. These are useful
if you want to get out of your lease before its
termination, or if you're selling the practice
and want to transfer the lease to the new

APRIL 2020 // dentaltown.com

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Dentaltown April 2020

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