What to do when eviction note arrives

Article

Ohio case of veterinarian versus drugstore chain not an isolated incident; type of lease agreement crucial

Middleburg Heights, Ohio-Competition for veterinarians usuallydoes not include national drugstore chains such as Walgreens or CVS Pharmacy,unless your name is Dr. Deborah Fegan of Middleburg Heights, a southwestsuburb of Cleveland.

Fegan's landlord, Colombo Enterprises of Cleveland, thought competition-savvyWalgreens might view her leased property as lucrative - it's across thestreet from a CVS Pharmacy and another few hundred yards from Medic Drug.So Colombo pitched the idea to the chain, and a battle ensued, accordingto a November edition of The News Sun, a regional newspaper.

For two years Fegan, a devoted and persistent veterinarian who rentedproperty for her Berea Pet Hospital, fought to preserve her space, but inthe end was forced to bow to the corporate drugstore czar.

She reportedly was forced out of her lease, because her landlord wasable to cite her on lack of maintenance of her property as stipulated inher lease, even though Colombo Enterprises plans to raze the hospital forconstruction of Walgreens.

Neither Fegan nor her lawyer would return calls for comment.

Fegan was evicted from her building in late September after the OhioSupreme Court last spring denied her appeal of a decision favoring ColomboEnterprises.

Her story ended well, however, and the veterinarian has built a largerclinic (6,200 sq. ft.) a couple miles around the corner. She will move intoher new facility in February.

In the meantime, her receptionist said Fegan is maintaining a phone centerand making house calls for her clients. Additionally, local veterinarianshave loaned equipment to her and have offered to help treat some of herclients on an interim basis.

Incidents such as the Fegan case are by no means peculiar to veterinarypractitioners, says Dr. Thomas Allison, DVM, JD, of Moscarino and Treu inCleveland.

Such issues are simply landlord/tenant rights in a commercial versusresidential sense. "It is more the legal issue of the circumstancesunder which a lease can be terminated versus anything that may be particularto the veterinary context," he says.

Exercise your options

A veterinarian looking to lease space - whether in a shopping centeror in a stand-alone facility - should guarantee a minimum three- or five-yearlease with an option for one or two five-year extensions before signingan agreement, says Karl Salzsieder, DVM, JD, a Washington-based veterinaryconsultant.

Signing a lease with options to renew protects both the veterinarianand landlord, he says.

As a landlord and previous renting veterinarian, Salzsieder looks atboth sides of the leasing agreement.

"If you're worried as a veterinarian, you need to have options.These days location can be so important with veterinary medicine. With theeconomy the way it is, and our tendency to look at merger mania, you wantthe freedom to get out," he says.

There is usually no charge for the options, but they will be at marketrate.

"If the market rate went crazy, and say McDonald's wanted to takeyour spot, then you could at least argue that McDonald's was going to paymore than market. That would be the only protection other than basicallya longer lease," says Salzsieder.

Longer leases are no friend of veterinarians, though, Salzsieder warns.

"Then you are at risk if you want to move. You want to have someflexibility, assuming you find some better merger nowadays. If you don'thave any options, there are really no chances in court. It's a free worldas far as the landlord is concerned."

Know your rights

John Scott, DVM, JD, who used to practice veterinary medicine in Houstonand remains a consulting attorney to veterinarians, says as long as youhave a working lease, you are safe.

"They usually can't kick you out until the lease expires, but oncethe lease is gone, you basically have no more rights to the property,"he says. "If you move out before your lease expires, you're liablefor paying that lease whether you are there or not."

The problem some individuals face is when they fail to renew the leaseearly enough. Scott advises individuals should start to negotiate leaserenewal at least a year before the lease expires.

"Some people I'm sure have been caught thinking everything was fine,"he says. "That they would stay on a month-to-month basis and then negotiatethe lease.

"The property owner is sitting there thinking, 'Gosh, I wonder ifthey're going to stay.'"

If there is any question in the landlord's mind, that is enough impetusfor them to begin making alternative arrangements for the property. In themeantime, they may locate a potential tenant willing to pay whatever pricefor the space.

Be aware that the landlord is not obligated to inform you of his or herplans.

"They will sit there and, as lawyers say, 'Hide behind the log'and hope that you don't realize that your lease is about to terminate,"says Scott. "When it does, they say, 'Sorry you've got 30 days to moveout.'"

Read fine print

If a landlord has a prime tenant lined up for your property and wantsto play hardball, he or she may dissect the lease agreement to cite youfor even the most minute of technicalities, says Scott.

Then they can claim you have broken the lease and that you must leave.A late rental payment, modifying the property when the lease specificallyforbids it, or any number of other rules in the fine print are grounds forbidding you farewell, he says.

"A lot of times so many things are written in there that if youdon't read that lease carefully, almost everyone would break that leasetechnically," says Scott. "If they want to keep you there, obviouslythey can overlook those things."

In the case of Fegan, Scott asserts that the property owner was fullyaware of the potential for Walgreens to sink a large sum of money into thebuilding and to become a long-term tenant.

Take best advice

Scott's best advice: read the lease. If you don't understand somethingin the lease, contact a lawyer who works in that area of expertise to reviewthe lease.

Speaking from experience - Scott once leased property in Houston -hesays he hardly ever reads the leases closely.

"You come across something and you think, 'Hmm, I wonder what thatmeans,' but you keep going. You hate to pay an attorney $500 to review itand then just say, 'Yeah it looks good to me.' We think of ourselves aseducated people. We think we can read a lease as well as a lawyer can."

In some cases, that may be true. Make sure you are one of those cases,he advises.

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