There is one issue that quietly derails more medical practice sales than almost anything else:
The personal guarantee in your lease.
Most physicians sign their original lease early in their ownership journey. At that stage, you are focused on buildout costs, equipment, hiring staff, credentialing, and getting patients through the door. The landlord presents a lease. Buried inside is a personal guaranty. You sign it.
Landlords rarely release personal guarantees easily. And when a practice is under contract to sell, that guarantee often becomes leverage.
If not handled properly, it can reduce your negotiating power, delay your closing, or leave you financially exposed long after you have exited.
A personal guaranty makes you personally liable for the lease if the tenant defaults.
Even if you sell your practice, if the landlord refuses to release you from the guaranty, you remain financially responsible if the buyer fails.
That means you may have:
And still be personally liable for years of future rent.
In effect, you have exited the upside but retained the downside risk.
That is not a clean transition.
From the landlord’s perspective, the personal guarantee is security. They originally underwrote you. You have a track record. You pay on time. You are stable.
A new buyer represents uncertainty.
When the lease assignment request comes in, landlords often respond with:
Once your practice is under contract, your leverage is reduced. The buyer wants to close. You want to close. The landlord knows this.
That is why lease strategy should be addressed long before you go to market.
When you first start your practice, you may not have a choice.
If you do not yet have a strong operating history or substantial assets, most landlords will require a personal guaranty. Early in your career, signing one may be necessary to secure space.
That is understandable.
What is not understandable is leaving that same unlimited guaranty in place ten or fifteen years later when you now have:
Your leverage increases over time. Most physicians simply never revisit the issue.
The best opportunity to remove or reduce a personal guaranty is during lease renewal negotiations.
Renewal is leverage.
When renewal discussions begin, you should consider requesting:
But negotiation only works if you are willing to walk.
One of the strongest strategies is to quietly explore alternative locations before renewal. Engage another landlord. Review comparable spaces. Let your current landlord understand that you are being courted elsewhere.
Medical practices are highly desirable tenants. You provide consistent traffic, professional credibility, and long term occupancy. Vacancy is expensive for landlords.
Leverage only works if it is real.
A medical practice without a cleanly assignable lease is difficult to sell.
If the landlord refuses to release your personal guaranty, several problems arise:
The harsh reality is this:
If you remain personally liable after closing, you have not fully exited.
Your business loses value when the lease creates uncertainty.
Here is something many sellers do not realize.
Buyers usually do not fight for the seller’s release from a personal guaranty.
From the buyer’s perspective, if the landlord insists that the original doctor remain on the guarantee, it may actually make approval easier. The landlord feels protected. The assignment moves forward.
The buyer closes. The landlord keeps security. The seller keeps the risk.
That is why the seller must advocate for their own release.
If you do not push for removal of your personal guaranty, no one else will.
Selling your practice should not mean underwriting someone else’s future performance.
Before you even consider selling, review:
If there is a personal guaranty in place, address it early. Do not wait until you are under contract.
The earlier you address lease structure, the more negotiating power you retain.
You worked too hard to build your practice to walk away carrying unnecessary risk.
If you signed a personal guaranty early in your career, that may have been necessary at the time. But as your practice matures, your lease strategy should mature as well.
A clean exit means:
Anything less deserves serious reconsideration.
Protect your leverage. Negotiate strategically. And never assume a landlord will voluntarily release you once a deal is already in motion.
To learn more about the author, Allura Engel, Medical and Healthcare Transition Specialist at EDGE Business Advisors, and to view her full bio and services, click here.