North Texas Dentistry Volume 8 Issue 4 2018 ISSUE 4 DE | Page 28

legal corner
A BRIEF LEGAL GUIDE TO
Purchasing Dental
Real Estate
by Josh Bishop
The process of purchasing dental real estate is often the source
of much confusion among the dentists we work with. Many of
our clients are first-time buyers, and the multiple stages and
deadlines involved in the process can be difficult to navigate.
The physical setting where dental work is performed can be
divided into roughly two categories: (1) locations that are
leased, and (2) locations that are owned. Typically, dental-
owned property comes in the form of a standalone building or
as part of a condominium, as opposed to being part of a large
shopping center or building under lease. While the purpose of
this article is not to discuss the pros and cons of purchasing ver-
sus leasing, many dentists do experience increased autonomy
and financial benefits through ownership. This article briefly
discusses the legal process involved in purchasing real estate
for one’s dental practice.
The LOI and Real Estate Contract
After finding the desired location, the dentist’s broker will typ-
ically help to negotiate and prepare a Letter of Intent (LOI) that
establishes the basic deal points to be included in the real estate
contract and deed. Soon thereafter, the seller will deliver a pro-
posed real estate contract with the specific legal terms of the
deal. This draft will naturally be slanted towards the seller’s
interests and thus will require a thorough inspection, further
negotiations, and additional markup. As a starting point, it is
important to ensure that this contract correctly incorporates the
LOI terms previously negotiated. It is also crucial to inspect the
contract verbatim for legal landmines, and to ensure the terms
match the dentist’s expectations and deal-specific needs.
Equally important is the need to insert terms that are missing
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from the contract altogether, which can sometimes mean the
addition of entire pages and exhibits to the contract. Except in
very unusual cases, this initial draft contract should not be
signed without including necessary revisions protecting the
buyer’s legal interests. The buyer’s attorney can help determine
what changes are needed and can edit the contract and negoti-
ate those points directly with the seller or seller’s attorney.
Some examples of changes we see at this stage include negoti-
ation of additional inspection period options (discussed further
below), stronger buyer remedies if the seller tries to back out of
the deal, more robust representations and warranties concern-
ing the condition of the property, and the addition of any nec-
essary future seller promises.
The Inspection Period
The real estate contract will also set forth the due diligence
period (also known as a “feasibility” or “inspection” period),
which typically ranges anywhere from 30 days to 90 days begin-
ning on the date of the contract. Additional time can typically
be added on through extension options, in exchange for addi-
tional earnest money deposits. During this time, the title and
survey companies will issue the title commitment and survey
for the property, and the dentist will perform any needed
inspections, studies, and investigations into the land and build-
ing. The buying dentist will also want an attorney to carefully
examine the title commitment and the recorded documents ref-
erenced in the commitment, to ensure there are no harmful
defects to title or surprising encumbrances on the property. In
short, the inspection period is a critical time for the buyer to
commit to purchasing the real estate and proceed to closing,