Recent reports from commercial brokers show that, despite the pandemic (or, perhaps, because of the pandemic), the medical office market remains robust and will likely stay that way due to continued population growth in Arizona. Population growth means more medical office development, more sales, and, of course, more medical office building leases. When it comes to medical office building leases, some of the key legal issues include:
1. Death and Disability Clauses: In the case of solo medical practitioners, requesting a death and disability clause is usually a good idea. Many landlords will initially resist this request, but, with a small penalty or fee, landlords will often agree to this clause.
2. Anti-Kick-back Laws: Oftentimes a medical tenant leases from a property that is hospital or physician owned. There will be special leasing provisions that need to be included in the lease if this is the case.
3. Privacy and Inspection Issues: In most commercial leases, a landlord has the right to enter your space to inspect for compliance issues, to show the space to prospective tenants, and to make repairs. Healthcare tenants must limit the landlord’s access rights to the space, especially during business hours, and they must restrict access to patient records.
4. Use Provisions: Oftentimes, medical tenants utilize hazardous materials, generate medical waste, and need machinery like X-ray machines, CT scans, and other equipment that can emit radiation. These special issues need to be addressed in a lease to ensure a tenant’s ability to utilize the equipment.
5. ADA Compliance: Medical tenants need to review the ADA clause contained in their lease. Medical patients, as compared to members of the general public, are more likely to have special access needs.
There are other unique issues involving medical office tenants, including the duration of the lease, tenant improvements, and exclusivity. For a complete checklist of items to include in a medical office lease, feel free to email me firstname.lastname@example.org or call 602-533-2840.
Patrick R. MacQueen is a founder of MacQueen & Gottlieb, PLC.