Choosing the right office space is a crucial decision for any professional, but for psychologists and therapists, it’s particularly important. The therapeutic environment significantly impacts the client experience and the practitioner’s well-being. Notwithstanding, for any professional, entering into a leasing contract may be one of the most significant decisions you will make. Whether you are a sole practitioner looking for a part-time space or a practice director looking are ought to taken to ensure that you aren’t assuming a significant liability.
This blog post will explore key factors to consider when leasing a property for your practice, from location and accessibility to creating a safe and welcoming space for both clients and therapists.
Commercial Leasing: Are the Premises Suitable?
Before you consider the wording of the con, there are a few practical considerations about the suitability of the premises.
Are the premises in a location that is easily accessible to clients, with convenient parking, public transportation options, and close proximity to major thoroughfares?
Will there be construction nearby in the foreseeable future? It is surprising how often premises are found out to be next to a proposed work site.
Consider the visibility of your office. Are you intending to engage new clients from foot traffic? If not, then visibility may not be so important. Keep in mind that at the least you will likely need be adequate signage so your clients can find you.
Consider the size of your practice and future growth plans. Ensure the space is large enough to accommodate your current needs and allows for potential expansion.
The layout of the space is crucial. Consider creating separate waiting areas, consultation rooms, and potentially a small break room for staff.
Determine your budget. Set a realistic budget for rent, utilities, and other expenses and assess what you are willing to pay.
Is there suitable parking or public transport near the premises. A practice that is difficult to
travel to will have considerable issues retaining clients longterm.
Commercial Leases for Therapists: Who is the Landlord?
One key issue that often comes up after a lease is signed is whether you will be able to work with your landlord if issues of concern arise during the life of the lease.
If the Landlord is offshore, has had a series of rotating tenants through the space or is otherwise very difficult to reach, this may be an indicator that there is potential for later issues and dispute to escalate and/or remain unresolved long term. Some comfort may be found if the landlord has retained property managers as this may indicate they will be easier to contact.
You should seek to have a face-to-face meeting with the landlord so that you can build a good working relationship. Despite the terms of the lease, a strong working relationship with a landlord will overcome many difficulties that arise in the lifespan of the lease.
Commercial Leases for Therapists: Is the Lease Agreement Fit for Purpose
Once you have received the proposed draft lease there will be a number of legal matters to
consider.
Is this a lease (which provides exclusive possession) or a licence (which is non-exclusive)? If the agreement is a licence, make sure you are only paying for the premises in the times that you are using them. It may be that the lease should properly be a licence, especially if it permits the landlord to share the premises with other parties.
If you are leasing a retail space or a space within a shopping centre, it may be that the lease is classed as a ‘retail shop lease’ (under your state’s regulatory rules) in which case specific regulations and disclosures may apply.
Term and Options: The lease term must be appropriate for your needs, with options for renewal considered carefully. Keep in mind that without clearly stated option periods, it may be open for the Landlord to seek to take the premises back to market to increase the rent or for any other reason decline to renew the lease. Options are non-binding on you and provide peace of mind that you will not need to seek fresh premises in the near future.
Rent and Outgoings: Rent should be market-based and clearly defined, including how outgoings (e.g., utilities, maintenance) are calculated and paid. If there are a number of outgoings, it may be suitable to seek a statement of indicative outgoings for the last few 12-month periods.
Rent Reviews: Regular rent review clauses should be carefully considered to ensure you can afford ongoing lease payments. Somme leases will include market reviews that provide a discretion to the Landlord to significantly increase the rent at each point of review.
Security: You should carefully evaluate the required security deposit or guarantees to ensure
they are reasonable and manageable. Personal guarantees should be treated with caution as these may significantly increase your liability. Some leases may require both a bond and a bank guarantee, which is probably excessive.
The lease agreement must clearly define the permitted use of the property, and you should ensure it aligns with your intended purposes. You might also consider negotiating for exclusivity clauses to prevent the landlord from leasing similar premises to competitors.
The lease should clearly outline access rights for you and the landlord, while also outlining responsibilities for property maintenance and repairs. Keep in mind that disputes about upkeep and maintenance of air-conditioning is the most common point of dispute in commercial leases, so it is worth ensuring the air-conditioning terms are crystal clear about each party’s responsibility.
A crucial clause is the provision for the landlord’ right to sell the property. The lease should ensure that any new owner is bound by the existing lease agreement, protecting your tenancy.
The lease should clearly define your rights to sublease or assign the lease to another party, including any restrictions or landlord approval requirements. You may want to license the use of the premises to other practitioners, so ensuring that you have the right to do this before your sign is essential.
You should check whether you have the right to put your own signage in place. Are there any building rules mentioned in the lease. You may need to seek a copy of these.
The lease agreement should clearly outline insurance obligations for both the landlord and the tenant, as well as responsibilities for property damage and maintenance. One area of concern is the extent of the make-good obligations. Some leases will require you to repaint and refloor the remises on cessation of the lease, so keep an eye out for these clauses as that may be very costly.
The lease agreement should clearly define the circumstances under which either party can
terminate the lease, ensuring fair and equitable treatment for both parties.
If you have any questions about how the lease operates, you should seek legal advice.
Commercial Leases for Therapists
Choosing the right office space and ensuring that the lease agreement protects your interests are an important decision that will have a significant impact on your practice. By carefully considering these factors and ensuring that the lease is fair and clearly drafted will ensure that you have no surprises. You should read the entire lease. If there are any clauses that are unclear or confusing you should seek legal advice.
