Negotiating a Texas Healthcare Lease

Texas does not have a standard promulgated form for commercial leases, which means every healthcare lease is genuinely negotiable, and every clause deserves a second look before you sign. These are the provisions that most often determine whether a lease works for a practice long-term.

Know your rent structure

Most practice leases fall into one of three structures:

• NNN (triple net): You pay base rent plus your pro-rata share of taxes, insurance, and common area maintenance. Most common in retail-adjacent and freestanding buildings.
• Modified gross: Some operating expenses are included in rent, others are passed through. Get specific about which is which in writing.
• Full service / gross: All operating expenses are baked into rent. More common in multi-tenant medical office buildings.

Whichever structure you sign, ask for a cap on controllable operating expenses (management fees, landscaping, etc.) so annual increases stay predictable.

Tenant improvement (TI) allowance

Practice build-outs, especially surgical suites, imaging rooms, and plumbing-heavy layouts, are expensive. Negotiate the TI allowance amount, who controls the work letter, the deadline to use it, and who owns the improvements at lease end. Also confirm rent commencement can be delayed until the space is actually usable, not just delivered.

Permitted use: write it broadly

The permitted-use clause should cover everything you might reasonably do in the space over the lease term: surgery, pharmacy, boarding, grooming, imaging, or ancillary retail, not just "veterinary clinic." A narrow permitted-use clause can block you from adding services later, or complicate a future sale if a buyer wants to expand services.

Assignment and subletting

If you ever sell the practice, your buyer typically needs the lease to transfer. Negotiate assignment rights up front. Ideally, an assignment to a buyer of substantially all the practice’s assets should not require the landlord’s consent to be unreasonably withheld or delayed.

Personal guaranty

Landlords often ask for a personal guaranty, especially from newer practices. If one is required, negotiate a burn-down provision that reduces or eliminates the guaranty after a track record of on-time payment (commonly 2–3 years).

Default, cure periods, and exclusivity

Confirm the notice-and-cure period for both monetary and non-monetary defaults, and check whether the landlord has granted, or could grant a competitor, an exclusivity provision that would restrict your services.

Renewal options and market rent

Options to renew are only useful if the rent-setting mechanism is defined clearly (fixed steps, CPI, or a capped fair-market-value process). An option with an undefined "then-current market rate" gives you very little real negotiating power.

The lease you don’t read carefully today is the lease you’re stuck negotiating from a weaker position in five years.

We review and negotiate healthcare leases on behalf of tenants across Texas, and coordinate the real estate side of practice transitions with our affiliate, Veterinary Sales & Consulting, when a sale is involved.