Do I Need a Lawyer to Review a Dental Practice Contract?
You’ve negotiated a purchase price, shaken hands with the seller, and the deal feels done. Then the 40-page purchase agreement arrives, packed with representations, indemnities, earnout formulas, and restrictive covenants you’ve never seen before: the kind of issues a dental business lawyer reviews every day.
Signing without legal review might save a few thousand dollars upfront, but it can cost you hundreds of thousands when undisclosed liabilities surface, payer credentialing stalls, or your non-compete locks you out of your own neighborhood.
Received a dental practice purchase agreement, DSO offer, or partnership buyout document? Call (800) 499-1474 to pressure-test terms, negotiate protections, and close without inheriting the seller’s problems.
Key Takeaways for Dental Practice Contract Review
- Purchase agreements allocate post-close risk; without legal review, you may inherit liabilities the seller never disclosed
- Lease assignments require landlord consent and personal guarantees that outlive the deal; attorneys can spot traps before you sign and negotiate exit clauses
- Restrictive covenants control where you practice for years after closing; enforceability varies by state, and overbroad terms can get struck down in court
What Does a Dental Practice Lawyer Look for in a Purchase Agreement?
A dental practice contract review attorney reads beyond the purchase price to identify terms that shift risk onto you.
Representations and Warranties That Survive Closing
Representations and warranties are the seller’s promises regarding the practice, including financial accuracy, equipment ownership, absence of pending lawsuits, active licenses, and compliance with employment practices. If these statements prove false post-close, you need legal recourse.
Indemnity Provisions and Escrow Holdbacks
Attorneys scrutinize indemnity provisions that obligate the seller to reimburse you for losses caused by their misrepresentations. Without survival periods and enforceable indemnity caps, the seller walks away while you pay for their mistakes.
Lawyers also negotiate escrow holdbacks, where 10 to 20 percent of the purchase price sits in a third-party account until you confirm no hidden liabilities emerge.
Deal Structure and Closing Conditions
Beyond liability allocation, attorneys audit:
- Asset vs. stock structure and tax implications
- Accounts receivable purchase terms, like collection adjustments, aging write-offs, and credit risk
- Earnout formulas, including production metrics, referral dependencies, and seller-controlled variables that manipulate payouts
- Closing conditions, such as landlord consent, payer credentialing approvals, lender financing, and regulatory clearances
Generic templates may overlook dental-specific risks, such as payer contract assignments, DEA registration transfers, and HIPAA business associate agreements. A dental transaction attorney flags gaps before they derail your closing.
Asset vs. Stock Purchase: Which Structure Needs Legal Review?
The legal structure of your acquisition determines liability exposure and post-close compliance burdens.
| Decision Point | Asset Purchase | Stock Purchase |
| Liability exposure | Leave behind unknown debts and lawsuits | Inherit all liabilities—liens, claims, disputes |
| Tax treatment | Step-up in basis; lower future depreciation | No step-up; carry seller’s tax basis and audit risk |
| Payer credentialing | File new applications; 60–120 day delays | Immediate continuity; no re-credentialing needed |
| Lease assignment | Requires landlord consent; risk rejection | Lease stays intact; no assignment approval needed |
| Closing speed | Slower—requires third-party consents | Faster—fewer approvals and resets |
Some buyers favor asset deals for liability protection. In contrast, stock purchases may suit buyers who need immediate cash flow continuity or face landlords unlikely to approve an assignment.
Either way, attorneys negotiate indemnity protections, run UCC lien searches, and confirm tax clearances before you commit.
Dental Office Lease Review and Personal Guarantee Risks
Commercial leases typically require landlord consent to assign, and property owners may use transactions as leverage to raise rent, shorten terms, or impose personal guarantees. Without a legal review, you may sign a guarantee that holds you liable for rent even after you sell the practice or leave; a strong reason to hire a lawyer when leasing out a dental office.
Attorneys review:
- Assignment and sublease provisions: Confirm the landlord must consent and under what conditions
- Personal guarantee scope: Cap liability to the initial term, exclude renewal periods, and negotiate release upon sale
- Subordination, non-disturbance, and attornment (SNDA) clauses: Help protect you if the landlord refinances or sells the building
- Remaining term and renewal options: Leases expiring within 18 months could jeopardize financing and resale value
If the dental office lease lacks assignment rights or the term is too short, attorneys may negotiate extensions or relocation clauses as closing conditions. They also confirm you are not inheriting deferred maintenance, tenant improvement obligations, or unpaid common area charges that the seller neglected.
Restrictive Covenants: Non-Compete and Non-Solicit Enforceability
Non-compete and non-solicitation covenants protect your goodwill investment by preventing the seller from opening a competing practice nearby or poaching your staff and patients. Most dental purchase agreements include geographic and time-based restrictions.
Enforceability varies dramatically by state. Without legal review, you might accept a covenant that is unenforceable in your jurisdiction or so broad that courts strike it down entirely.
Attorneys draft covenants narrowly tailored to protect legitimate business interests:
- Geographic scope tied to your actual patient draw and referral base
- Time limits that balance protection with reasonableness
- Non-solicitation clauses that bar the seller from contacting patients, employees, and referral sources
- Liquidated damages or injunctive relief provisions so you have remedies if the seller breaches
Lawyers also verify that the seller has no conflicting restrictions from prior employers or partners that limit their ability to grant you exclusive rights.
Reps, Warranties, and Indemnities: Why They Matter Post-Close
Representations and warranties are the seller’s sworn statements about the practice. The seller might represent that financial statements are accurate, equipment is owned free of liens, all licenses are current, no regulatory investigations are pending, and employment practices comply with wage and hour laws.
These reps survive closing giving you a legal claim if the seller misrepresented material facts. Without survival periods, the seller can lie about debts, lawsuits, or compliance violations and face zero consequences after closing.
Indemnity clauses obligate the seller to reimburse you for losses caused by breaches. Attorneys negotiate:
- Indemnity caps and baskets
- Escrow holdbacks
- Carve-outs for fundamental reps
If the deal includes an earnout tied to future production or collections, lawyers can define metrics precisely, require transparent reporting, and cap your exposure to seller-controlled variables. Earnouts that depend on the seller’s cooperation or goodwill may fail, leaving you paying for phantom performance.
Patient Records, HIPAA, and Business Associate Agreements
HIPAA regulations govern how patient records are transferred during acquisitions. In asset deals, you become the new covered entity and must execute business associate agreements (BAAs) with your billing company, cloud storage vendor, and any third-party service touching protected health information.
Attorneys verify:
- The seller provides complete patient files
- Joint transition letters notify patients of the ownership change and their rights
- The seller maintains HIPAA-compliant policies, staff training logs, and breach reporting
- No unreported data breaches occurred within the past six years
Post-close, update your Notice of Privacy Practices, retrain staff, and confirm your electronic health record system encrypts data and logs access properly. Your attorney may draft the updated policies and compliance protocols you’ll implement.
FAQ About Dental Practice Contract Review
How Do Non-Compete and Non-Solicit Clauses Affect Me After Closing?
Restrictive covenants control where you practice and who you contact for years after closing. Enforceability varies by state, and overbroad terms get struck down. Attorneys draft enforceable covenants tailored to your jurisdiction and growth plans.
Do I Need Malpractice Tail Coverage When Buying a Practice?
Yes. Tail coverage closes the gap between the seller’s claims-made policy expiration and future claims arising from pre-sale treatment. Require the seller to purchase tail insurance or escrow funds to cover the premium before closing.
How Do PPO Credentialing and Assignment of Benefits Impact Cash Flow?
In asset purchases, your new entity must apply for PPO, Medicaid, and Medicare participation from scratch. Attorneys file applications early, confirm whether state Medicaid allows assignment of billing rights, and negotiate seller carryback terms to bridge the cash flow gap.
Close Without Inheriting the Seller’s Problems
Purchase agreements, lease assignments, and restrictive covenants shift risk onto buyers who sign without review. Enforceability of agreements and covenants varies by state. Call (800) 499-1474 to negotiate protections, run due diligence, and lock in terms that hold up post-close.