Handling the thorny issue of premises on departure or retirement of a GP partner: Leasehold

It is increasingly common to receive requests for support when it comes to the handling of practice premises in cases where a GP partner is set to leave a partnership. 

In the first of two related blogs on GP premises, we look at the position when it comes to managing leasehold practice premises when a GP partner leaves the partnership. 

Three key focus areas:

Assigning the lease

Making sure that the outgoing partner is removed as a named party to your lease will be one of the most crucial steps you take. Only by doing so, can you ensure that it is the remaining partners that have the benefit and burden of the lease without interference from former partners. 

However, whilst a crucial step, an understanding of your lease terms will be essential. These terms will dictate the circumstances where you are permitted to assign the lease, whether landlord consent is required and what (if any) conditions exist. 

Condition of the premises

Assessing the condition of your leased premises against your repairing obligations under the lease is also likely to prove an important consideration. If you have a lease that is nearing the end of its term, and the property has substantial dilapidations then, unless your Partnership Agreement covers this, a discussion is usually required to assess how the cost of any dilapidations will be met and how any accrued maintenance or repair fund is to be handled 
between the outgoing and continuing partners. 

These discussions can be tricky as dilapidations are not normally crystallised so cover a debt that may not ultimately materialise (or at least may not materialise in full). Nevertheless, discussions are important, and they usually focus on whether the outgoing partner retains responsibility for the ultimate cost of dilapidations (or an appropriate proportion) and whether they retain the benefit of any sums that have been accrued to cover it. There is no right or wrong answer but creating certainty can avoid a drawn-out dispute.

Periodic charges, including service charges

Considering the treatment of periodic charges under your lease is important. We would usually expect normal periodic lease expenses to be picked up in the leaving accounts so that expenses such as rent and utility costs up to the relevant leaving date are considered when determining sums payable to the outgoing partner. 

However, it is not always as straight forward as this as partnerships can, in certain instances, have disputed debt (such as a disputed service charge or facilities management debt). Again, unless your Partnership Agreement already has provisions to cover the issue, these discussions can be tricky as the debt may not ultimately materialise (or at least may not materialise in full) once the dispute runs its course. In such circumstances, discussions once again will primarily focus on whether the outgoing partner retains responsibility for the ultimate debt (or an appropriate proportion) and whether they retain the benefit of any sums accrued to cover it. There is no right or wrong answer but creating certainty is key. 

Comment

Focusing on these three areas has proven to be key to managing leasehold practice premises when a GP partner leaves the partnership. Whether you are considering them in advance as part of agreeing a new or revised Partnership Agreement (which is always recommended) or as a part of retirement, our primary care team can guide you through the process and create certainty on the issue for all parties. 

Do contact Rob Day if you require support or for more information.  

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