Leaving your GP premises: what you need to know
Whether an NHS GP is retiring or simply moving to another practice it is essential that practical property arrangements do not create a further source…
Whether an NHS GP is retiring or simply moving to another practice it is essential that practical property arrangements do not create a further source of uncertainty.
When departing from a practice, a partner's interest in the freehold of a building with a capital value (and possibly a mortgage) is unlikely to be forgotten about. Very few would consider walking away from this asset without ensuring all the paperwork was done to transfer ownership
However, an interest in leasehold premises is sometimes misunderstood and ignored, with costly consequences. It is a common assumption that as the property is rented and not owned that when you leave, you have no ongoing liabilities as your partners remain in the property and have signed the original lease with you. In reality if you simply walk away without dealing with the lease you may find your self liable to the landlord at a later date.
A partnership has no legal entity so when partners rent their premises they have to do so in their individual names and all signatories are bound personally. The lease is a binding contract between the landlord and the individuals signing it. As such the signatories become obligated under it and are unlikely to be able to walk away without the proper paper work in place. Dealing with a partner’s retirement from the partnership simply through the partnership deed arrangements is one thing but this does not deal with the interest created by the lease itself and the two must be handled at the same time.
The key to this is to understand the tenant's covenants that govern how you may dispose of your interest. These are called alienation rights. The provisions will commonly involve the requirement to seek the consent of the landlord to pass your interest to another party. This includes where one partner leaves the other partners all of whom signed the original lease.
A well-drafted GP lease should provide that where GPs are retiring, they may assign the interest they have to the remaining partners (provided that they have a valid GP contract and are in receipt of rent reimbursement) without the need for consent. A robust negotiation when you take a lease on may well be able to achieve this for you. However private commercial landlords who are unfamiliar with the way in which a primary care practice is likely to operate are not as willing to permit this kind of arrangement. Furthermore, you may be required to enter into an authorised guarantee agreement whereby you guarantee your successor in title. This is a complex legal issue and you should take independent advice prior to signing a lease as well as approaching your retirement.
With this in mind, retiring partners should open up a dialogue with the landlord at the earliest opportunity once their mind is focused on retirement. It is likely that where consent is required, the landlord will expect their professional fees to be paid and the appropriate documentation will need to be completed between the parties and then, registered at the Land Registry to ensure that you no longer have any liability under the lease.
You should also dovetail these arrangements with any requirements in the partnership deed and again this may require further documentation and obligations from the continuing partners
In summary, it is very important that you are not left 'on the hook' following departure from practice. Never confuse the two distinct contractual relationships with regard to your lease and your partnership, and make sure you are adequately covered with regard to your retirement in terms of both.
Alienation covenants are a complex area of law, and you should make sure you take proper legal advice in order to protect yourself against the potential for future claims against you.