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Potential Tenant or Percentage Profit Center?

Provided by:  Jennifer Kirschenbaum, Esq.

April 18, 2017

 

Question:


Hello Jennifer,
 
I have a colleague who wants to rent space in my office, and who can also see some of my overflow and offer insurances I don't take. Can the colleague pay me rent plus a percentage of earnings?

What do you think?

Thanks, Dr. P

Answer:

Hi Doctor, I have to conjecture there are reasons you are not looking to employ this individual - potentially because you do not want to deal with payroll, or the risk of bringing on an employee and exposing your patients to another option, however, you cannot have your cake and eat it too. Maintaining separation between yourself and your colleague puts the transaction at arms-length - and for such transactions applicable guidelines dictate the compensation for such an arrangement be locked at a flat fee - a percentage arrangement should not be on the table.  In addition to a flat fee, the fee has to be fair market value, set in advance and set forth in writing. There is a required template. 

Happy to discuss offline, but before you proceed the arrangement should be papered properly, with the fee structure appropriately vetted.  


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