Your Actual Exposure: $520,000

A $8,000/mo healthcare lease doesn't create $8,000/mo in liability. It creates $520,000 in total exposure across rent, personal guaranty, restoration, and every other clause your landlord drafted to protect themselves — not you.

Where $520,000 Comes From

Remaining Rent$240,000
Personal Guaranty$192,000
Restoration$60,000
CAM Charges$48,000
Early Termination$48,000
Legal Fees$25,000
Holdover$48,000
Total Exposure$520,000

What Most People Miss

The succession problem. A physician signs a 10-year personal guaranty. They plan to retire in year 7. The remaining 3 years of personal liability ($288,000) doesn't disappear with retirement.

Key Risks in This Scenario

  • Medical-grade build-out (exam rooms, ADA compliance, medical gas lines) creates $50,000-100,000 restoration obligations
  • HIPAA and licensing requirements embedded in use clause can trigger default
  • 10-year term exposes you to physician retirement risk — who guarantees the lease after you stop practicing?

How to Reduce Your Exposure

  • Include a physician retirement or disability release provision in the lease
  • Cap restoration to base building standard — no requirement to remove medical-specific improvements

Frequently Asked Questions

Should a medical practice sign a lease as an LLC or PC?
The entity should sign, but the physician will almost always need to personally guaranty. The question is how to limit the guaranty term and scope.
What is HIPAA-compliant space and does the lease cover it?
HIPAA compliance is your responsibility as the tenant, not the landlord's. The lease won't create HIPAA obligations, but your use of the space will. Build-out for HIPAA compliance (soundproofing, private entrances) is your cost.
What does medical office restoration cost?
Removing exam room partitions, medical gas lines, specialized plumbing, and ADA-compliant modifications runs $40-80 per square foot. A 1,500 sq ft practice = $60,000-$120,000.
Can a medical practice share a lease with another provider?
Yes, through a co-tenancy or sublease arrangement. But each guarantor is jointly and severally liable — if one provider leaves, the others bear full liability.
What happens to the lease if the physician dies or becomes disabled?
Without a disability or death release provision, the estate remains liable. This is a critical negotiation point that most physicians and their advisors overlook.