What Dentists Should Look for in a Commercial Lease Before Signing

A dental clinic lease is not a standard commercial lease. It is a long-term financial commitment tied directly to how you can operate, grow, sell, or exit your practice. Most leases are written to protect the landlord, and the clauses that create the most problems for dentists are often buried in sections that look routine at first glance.

If you are opening a new clinic, relocating, or renewing an existing lease in Alberta, this guide covers the specific terms you need to review before you sign anything.

“In our experience, dentists are often surprised by how much operational flexibility they've already given away before they even open their doors. The lease they signed two years ago quietly limits what services they can add." says Shounak Mehta, Principal lawyer at Juriscorp Law.

Permitted Use: Narrow Wording Can Limit Your Practice

The permitted use clause defines exactly what your space can be used for. If it says "general dentistry only," you may be prohibited from adding services such as orthodontics or oral surgery as your practice evolves.

Before signing, make sure this clause reflects every service you currently offer and every service you reasonably plan to offer. We see this clause cause real problems when dentists try to expand mid-lease and discover the wording does not support it.

What Is an Exclusivity Clause and Why Does It Matter?

An exclusivity clause prevents the landlord from leasing nearby space in the same property to another dental provider. Without one, there is nothing stopping your landlord from placing a competing clinic in the unit next door.

This protection is especially important in high-traffic retail plazas. When negotiating, be specific: name the services you want protected. Some landlords will argue that an orthodontist or denturist falls outside the scope of "dentistry," so vague language can leave gaps you did not intend.

Exclusivity is not automatically included in a commercial lease. It has to be negotiated.

Tenant Improvement Allowances and What Happens to Your Buildout

Dental clinic buildouts are expensive. Plumbing, gas lines, specialized ventilation, and dental-grade cabinetry can run into the hundreds of thousands of dollars. Landlords sometimes offer a tenant improvement allowance to offset these costs, but the details matter.

Two things to confirm before signing: when the allowance is paid and what triggers each payment. Delays tied to milestone approvals can create real cash flow pressure during your buildout. Also confirm who owns the improvements at the end of the lease.

In many commercial leases, some or all leasehold improvements become the landlord's property at the end of the lease. If you are also required to restore the space to its original condition on exit, those removal costs can be substantial.

CBRE's Canada Real Estate Market Outlook highlights that commercial leasing conditions and landlord incentives can vary significantly by market, making it important to understand local norms before accepting what a landlord presents as standard.

Personal Guarantees: Know What You Are Personally Liable For

Many landlords require a personal guarantee from the dentist-owner. That means your personal assets are at risk if the lease is breached, even if you operate through a professional corporation.

Try to negotiate the scope of the guarantee. A limited guarantee or one that applies only under specific conditions generally offers more protection than an open-ended guarantee. Also check what happens to the guarantee if you sell the practice.

If it does not terminate automatically on permitted assignment, you could remain personally liable for a lease you no longer have any control over.

Assignment Clauses: Planning Ahead for Practice Sale

The value of your practice is often tied directly to the lease. If assignment requires landlord consent and the landlord has broad discretion to refuse, your sale could stall or your practice value could take a hit.

A commonly negotiated position is that landlord consent cannot be unreasonably withheld, conditioned, or delayed. Also check whether an assignment triggers a rent increase or resets the lease to different terms. These are negotiating points, not fixed terms.

"A lot of dentists don't think about exit when they sign a ten-year lease. But what happens at year seven, when you want to sell, can be entirely shaped by what's in that assignment clause," notes Shounak.

Renewal Options and Rent Reset Risks

Dental practices invest heavily in a specific location. Losing the right to renew can effectively end your practice at that address.

Renewal option clauses should specify the number of renewal periods, the length of each period, and how rent is calculated at renewal. Be cautious of open-ended "market rent" resets without a clear method for determining rent or resolving disputes.

In competitive Alberta markets like Edmonton and Sherwood Park, an uncapped rent reset can produce an increase your practice cannot absorb.

Dental Lease Review Checklist

Before signing, confirm each of the following:

* Permitted use covers all current and planned services

* Exclusivity clause is in place and names specific protected services

* Tenant improvement allowance terms and payment triggers are clear

* Ownership of leasehold improvements at the end of the lease is addressed

* Restoration obligations on exit are defined and proportionate

* Personal guarantee scope is limited and terminates on permitted assignment

* Assignment clause allows practice sale without unreasonable landlord refusal

* Renewal options are included with defined rent calculation terms

* Lease term aligns with your business plan and any financing requirements

* Early termination rights and penalties are clearly stated

How Does a Commercial Lease Review Actually Help?

The cost of a legal review is a fraction of what one poorly negotiated lease clause can cost over a 10-year term. For many dental practices, lease obligations represent one of the largest long-term financial commitments alongside staffing, equipment, and occupancy costs.

At Juriscorp Law, our commercial real estate team works with business owners across Alberta, including in Edmonton, Rocky Mountain House, and Sherwood Park, to review and negotiate commercial leases before they are signed. If you are looking at a dental clinic lease, we are happy to start with a consultation and walk through what you have in front of you.

Not every situation is the same. Lease terms vary significantly depending on the landlord, property type, and market, so what is standard in one deal may be unreasonable in another. Getting specific advice on your specific lease matters.

Frequently Asked Questions

Can a landlord refuse to let me assign my dental lease when I sell my practice?

Yes. If your lease requires landlord consent without limiting the landlord's discretion, they can refuse or attach conditions. An assignment clause that requires consent not to be unreasonably withheld gives you much stronger protection.

What happens to my dental equipment and buildout if I leave the space?

It depends on your lease. Some leases specify that improvements stay with the space; others require you to remove everything and restore the premises. You need to know which applies before you sign, because the cost of restoration can be significant.

Do I need a lawyer to review a commercial lease in Alberta?

You are not legally required to have one, but commercial leases are long-term legally binding contracts. Mistakes are very difficult to fix after signing. A legal review before signing is the practical standard for any significant lease commitment.

Is an exclusivity clause standard in dental leases?

No. It is something you negotiate. Without it, your landlord has no obligation to prevent a competing clinic from opening in the same property.

What if the landlord says the lease is non-negotiable?

Most leases have room for negotiation even when presented as standard. A commercial real estate lawyer can help you identify which clauses carry the most risk and which requests are most likely to be accepted.