Animal Health Solution - a Covetrus magazine for veterinary professionals
Issue link: https://www.e-digitaleditions.com/i/1462843
19 Q1 2022 | Animal Health Solutions Assignment of the lease The assignment provision is certainly one of the most critical provisions in your lease agreement. When the time comes for you to sell your veterinary clinic/animal hospital, you, the future buyer, and your landlord will likely follow the terms contained within the assignment provision. Consider the following scenarios: Landlord's consent Most lease agreements state that the tenant needs to obtain the landlord's consent for an assignment of the lease. If your lease states that "consent may be arbitrarily withheld by, or at the sole discretion of the landlord", you may be in for a very unpleasant surprise when your landlord denies their consent for any reason that he/she chooses. Furthermore, some landlords may agree to be "reasonable" when consenting to an assignment of the lease, with the caveat that the net worth of the veterinarian purchasing the clinic is not below a minimum amount. How many new graduates or young veterinarians do you know with a minimum net worth of $500,000? Sounds like an unfair request. Landlord's right to clinic sale proceeds You have built a successful clinic over the last 30 years, and your revenue has increased significantly. What if your landlord had the legal right to take "consideration", or proceeds that you receive from the sale of your clinic? Most veterinarians are shocked to learn that come sale time, they owe their landlord 50-80% of the clinic sale proceeds for consideration. Take the time to review the assignment clause in your veterinary office lease agreement thoroughly, as this provision is included within a significant number of leases. Post-sale financial responsibilities Provided that you have avoided the above mentioned assignment clause pitfalls, you may think you're in the clear, right? Well, not quite. What many veterinary tenants don't realize is that when you assign your lease to the purchaser, often times you still remain financially liable under the lease. Your personal liability will remain unless you are able to successfully negotiate this provision out, or at the very least, amend the terms so that you are released after a more reasonable period of time. You don't want to receive a call from your old landlord well into retirement with a request for rental payments because the new tenant has defaulted!