GP Partnerships and Leases - Issues of Ongoing Liability
Where a GP partnership occupies premises under a lease, between two and four of the partners will be named as the 'tenant' on the lease.
Seeking Legal Advice
When entering into a lease, partners should seek legal advice to ensure that it contains key specific healthcare provisions which are appropriate for a GP partnership and which are different to the provisions of a standard commercial lease.
For example, a standard commercial lease will often require an outgoing tenant to provide an Authorised Guarantee Agreement (AGA) when the Lease is assigned. An AGA places an ongoing liability on outgoing tenants who are required to guarantee the performance of the new tenant's liabilities under the lease going forward.
However, it is common for a specific healthcare concession to be negotiated for GP partnership tenants as long as there are at least two or three continuing partners named as 'tenant' under the lease, or the lease is being assigned to another 'NHS Body.' Here, the assignment will neither require landlord's consent or the provision of an Authorised Guarantee Agreement (AGA). AGAs will still be required for any other assignment of the lease.
For more information about AGAs, please visit our recent Real Estate blog. AGAs are usually still required for any other assignment of the Lease.
If a GP Partnership Is Not Properly Advised
The partners may end up entering into a lease which requires them to give an AGA for all assignments including changes in partners within the partnership. This means partners named on the lease may have an ongoing liability to the landlord even where they have left the partnership and assign the lease to the continuing partners.
This situation can be avoided by obtaining advice from a healthcare surveyor to negotiate appropriate GP partnership specific terms for a new lease with a landlord and a healthcare lawyer to record the agreed terms in the lease.