How Lease Issues Can Slow Down—or Kill—Your Dental Practice Sale

If you're planning to sell your dental practice, your lease could be the biggest hurdle standing between you and the closing table. From outdated agreements to uncooperative landlords, lease issues are one of the most common (and preventable) reasons M&A deals fall apart or get delayed.

In this post, M&A attorney Jason Jones breaks down how lease complications can derail your sale, what buyers and lenders need to see, and what steps to take now to avoid surprises later.

Why Leases Matter in Dental Practice M&A

When you're selling your dental practice, you're not just handing over patient charts and goodwill, you’re also transferring a physical location that’s integral to the business. Buyers want continuity. Lenders want security. And neither can move forward unless your lease allows a clean and reliable transfer of the premises.

Common lease-related roadblocks include:

• The lease is expiring too soon

• The lease doesn't allow assignment or transfer

• The landlord refuses to cooperate

• There's no renewal option or it's hard to exercise

• The landlord insists on a new personal guaranty—even after the sale

Any of these can make a buyer nervous. Worse, they can prevent the buyer from securing financing or even void the sale entirely.

The Assignment Clause: Your First Red Flag

A key provision in any lease is the assignment clause, which governs whether and how the lease can be transferred to a buyer. If your lease says “Landlord may withhold consent at its sole discretion,” you could be in trouble.

That language gives your landlord full control to say no—even to a qualified buyer—and potentially tank the deal. In contrast, a more favorable lease allows for assignment with reasonable consent or “consent not to be unreasonably withheld.”

If you're more than 6–12 months from a sale, now is the time to review your lease and renegotiate if needed. Waiting until a deal is on the table puts you at a disadvantage.

How Buyers and Lenders View the Lease

Your buyer and your buyer's lender need to know that the space where the practice operates will still be available after closing. If your lease is short-term, expiring soon, or ambiguous, the lender may refuse to fund the deal. That forces the buyer to either renegotiate the lease (a time-consuming process) or walk away.

It’s especially risky if the buyer is taking out a loan backed by SBA or traditional practice acquisition financing. In those cases, lenders usually require:

• At least 5 years of lease term remaining (including renewal options)

• Clear assignment rights

• No requirement for the seller to remain personally liable post-sale

  
  

If your lease doesn’t meet these standards, the buyer may ask you to renegotiate or amend it. That creates delays, opens new risks, and adds legal fees.

Landlord Involvement Can Make or Break a Deal

Landlords are a wildcard in any practice transition. Some are cooperative and understand that a successful sale is in everyone’s best interest. Others are not.

Here’s a real-world example from Marti Law Group attorney Jason Jones:

“We had a deal where the landlord refused to return calls for three weeks. The buyer’s lender wouldn’t move forward without the lease assignment documents. The deal stalled and nearly fell apart.”

Even if the landlord does engage, they may try to force the buyer (or even the seller) into a brand-new lease—or demand a personal guaranty from the seller long after they’ve exited the business. In some cases, that means:

• More time spent renegotiating terms

• Additional attorney involvement

• Increased risk for the seller

  
  

That’s why we recommend engaging your landlord early in the process, ideally before you sign a Letter of Intent (LOI). Your attorney can help manage this communication.

What Happens When the Buyer Is a DSO?

Dental Support Organization (DSO) buyers tend to approach leases differently. DSOs may have more negotiating power or offer to enter a brand-new lease directly with the landlord, bypassing some assignment complications.

But this isn’t always a silver bullet. DSOs often have their own lease requirements and may walk away from deals that don’t meet their internal real estate standards. Sellers still need to anticipate delays or landlord pushback, especially if they signed their lease decades ago.

Proactive Steps to Avoid Lease Complications

If you’re planning to sell your practice within the next 1–3 years, here’s how to set yourself up for a smoother transition:

✅ Review your lease nowLook specifically at the assignment clause, term remaining, and renewal options.

✅ Extend your lease if neededBuyers and lenders prefer at least a 5-year term (in addition to renewal options).

✅ Negotiate assignment-friendly languagePush for “consent not to be unreasonably withheld” clauses.

✅ Start the landlord conversation earlyThe earlier you loop them in, the fewer surprises later.

✅ Work with a dental-specific M&A attorneyAn experienced attorney knows how to navigate lease assignments, negotiate favorable terms, and flag issues before they become deal-breakers.

Why the Right Attorney Makes All the Difference

Lease language might look like boilerplate, but in an M&A deal, it can have real consequences. According to Jason Jones:

“What separates someone who knows what they’re doing from someone who doesn’t is knowing how these mechanics play out in real deals. An experienced healthcare attorney understands industry standards and can steer sellers away from costly delays.”

If your attorney doesn’t routinely handle dental transitions, they may miss key pressure points—like how a poorly worded assignment clause or landlord delay could derail the sale.

Selling your practice is too important to leave to chance. A proactive review of your lease—paired with knowledgeable legal guidance—can make the difference between a smooth close and a deal that never gets off the ground.

FAQs: Dental Practice Lease Issues in M&A

Q: Can I sell my dental practice if my lease is expiring soon? A: Yes, but it may delay financing. Buyers and lenders typically want 5+ years of term. Renew or renegotiate early.

Q: What if my landlord refuses to assign the lease? A: Your deal may not be able to proceed. You may need to negotiate a new lease or find another location.

Q: Do I need to stay on the lease after the sale? A: Ideally, no. Your attorney should negotiate a release of personal liability.

Next Steps

Considering a sale? Don’t wait to review your lease. It could be the key to unlocking—or stalling—your transition.

Need help reviewing your dental lease before a sale? Marti Law Group can help you assess risks, negotiate favorable terms, and protect your interests every step of the way. Contact our team to start.