Why Your Veterinary Clinic Lease Needs a 10-Year Runway
February 22, 2026
As a practice owner, you likely spend your days focused on patient care, managing staff, and keeping the lights on. It’s easy to let the administrative side of things slide—especially when it comes to that thick, dusty lease agreement sitting in your filing cabinet.
But if you are thinking about your exit strategy, whether that’s selling to a corporate group or passing the torch to an associate, your lease is just as valuable as your client list.
One critical concept you need to understand is the “10-year runway.” Without it, your practice’s value could take a significant hit, and your retirement plans might stall before they even start.
What is the 10-Year Runway?
In the world of veterinary practice sales, a “runway” refers to the time remaining on your lease. This includes your current term plus any renewal options you have locked in.
For example, if you have two years left on your current lease and two options to renew for five years each, you have a 12-year runway. That is a safe position.
However, if you only have two years left and one five-year option, you have a seven-year runway. That is a problem.
Why Lenders and Buyers Care
Banks generally amortize loans for buying a veterinary practice over 10 years. If your lease expires in seven years, the bank sees a massive risk: what happens if the landlord kicks the new owner out before they’ve paid off the loan?
Because of this, lenders often refuse to finance a buyer if the lease term is shorter than the loan amortization period. If a buyer can’t get financing, you can’t sell your practice. It is that simple.
To secure your legacy and maximize your business value, you must negotiate to ensure you have that golden 10-year minimum before you put your practice on the market.
The Hidden Trap: Demolition Clauses
Even if you have 20 years of options on paper, there is a clause that can render them all worthless: the demolition clause.
This clause gives your landlord the right to terminate your lease early—often with just 6 to 12 months’ notice—if they decide to demolish, renovate, or redevelop the building.
For a veterinary clinic, this is catastrophic. Unlike a standard office that can pack up laptops and move down the street, a clinic has hundreds of thousands of dollars invested in leaseholds—x-ray rooms, surgical suites, and kennels. You can’t just pick those up and move them.
If a buyer sees a demolition clause, they see a ticking time bomb. It effectively reduces your “runway” to the notice period (e.g., six months). Negotiating to remove or strictly limit this clause is essential for protecting your practice’s future value.
Other Lease Landmines to Watch For
Beyond the runway and demolition clauses, a few other details can trip you up during a transition.
Rent Escalation
Is your rent set to jump significantly upon renewal? Predictable costs are key for buyers. If the rent is set to adjust to “market rates” without a clear cap or formula, it creates financial uncertainty that scares away investors.
Exclusivity Clauses
Does your lease prevent the landlord from renting space next door to a competitor? You don’t want a new corporate clinic opening three doors down in the same strip mall. An exclusivity clause protects your market share.
Assignment Rights
This is critical for your exit. Does your lease allow you to transfer (assign) the lease to a new owner easily? Some leases allow the landlord to terminate the lease entirely just because you asked to assign it. Ensure your lease states that the landlord cannot unreasonably withhold consent for an assignment.
Practical Next Steps
You wouldn’t perform surgery without checking the patient’s vitals first. Treat your lease with the same care.
- Pull out your lease today. Check your dates. Do the math on your runway.
- Look for the demolition clause. It might be hidden in the fine print under “Redevelopment” or “Termination.”
- Consult a professional. General commercial lawyers are great, but a professional who understands the specific nuances of veterinary transitions is invaluable.
Your lease is the foundation of your business. By ensuring it is solid today, you are paving the way for a smooth, profitable exit tomorrow.
