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Lease Payments Based On A Percentage Of Rent

Question: Can an Optometrist enter into a lease agreement with a corporation when the rent to be paid is based on a percentage of revenue from the optometric practice?

Answer: No. The Florida Board of Optometry has addressed this issue in answering several petitions for Declaratory Statement filed by Optometrists. The Board in its 1982 decision on the Petition for Declaratory Statement of Gary Gegerson, O.D. [5 FALR 433A] held that lease terms providing that the payment of rent is tied to a percentage of revenues from fees received from the Optometrist's professional practice is prohibited by Chapter 463, Florida Statues [Florida Optometric Practice Act]. The Board held that a lease provision tying rent to the amount of the Optometrist's revenues was inappropriate because it undermined the separation between the landlord and tenant necessary to avoid any improper influence of the Optometrist's practice by the landlord. The Board has reaffirmed this decision in answering subsequent Petitions for Declaratory Statement.

Certain commercial landlords have attempted to comply with the Board's decision by proposing lease amendments that convert a percentage of the Optometrist's revenue into a fixed rental payment with the resulting monthly rental amounts being several times the prevailing market rate for comparable space. It seems likely that the Board of Optometry will note the obvious subterfuge as an attempt to avoid the Board's decisions. Consequently, any Optometrist who enters into such a lease, either written or oral, it putting his or her license to practice Optometry in jeopardy.