Property Hot Topic - Documenting Your Property Arrangements
In this series of articles, VWV Property Litigator, Philip Sheppard, shares key property issues that often affect the healthcare sector including what to be aware of, the key warning signs and how to avoid problems.
In this issue, Philip discusses the importance of properly documenting occupational arrangements. Healthcare providers often share space to deliver holistic care to their patients. Many providers take space or provide space to others, without fully considering the implications of such an arrangement or without formally documenting it. Unfortunately, this approach can have serious repercussions.
Common problems which can arise include:
1. Not Knowing Who You're Dealing With
Although you might think you know who you're dealing with, it's not always easy to tell. A physiotherapist occupying a set of rooms might be doing so on his or her own behalf, or on behalf of a partnership or company for whom he or she works.
If you can't identify the parties, then you can't tell who has rights or obligations in respect of the property. This can make it practically and legally difficult to take action against the correct party, in the event of a dispute or if the arrangement needs to be terminated.
2. Not Knowing What the Parties Have to Do
In the absence of a written agreement, it might not be clear what the parties are allowed or obliged to do. For example, it may not be clear who is expected to keep the property insured or in repair, what services the landlord is obliged to provide, or what the tenant must pay for.
It may also not be clear whether the tenant is prohibited from doing anything, such as competing with the landlord's business or doing things which might become a nuisance to the landlord or put the landlord in breach of its own obligations.
3. Not Knowing When or How the Occupation Can Be Ended
Undocumented occupations can take many different forms, each of which must be ended in a different way and often on giving different periods of notice.
For example, some arrangements can be ended immediately, or on 'reasonable notice', whilst others may require up to 18 months' notice to bring them to an end. Unless formally excluded, tenants of business premises will often have 'security of tenure' - a right to remain in the property and demand a new lease once the lease expires.
This uncertainty can make it difficult to plan ahead. It's therefore very important to record clearly what sort of occupation has been agreed and to know how it can be ended.
Informal undocumented arrangements are fertile ground for disputes and for unexpected costs and obstacles for both landlords and tenants. We would always recommend seeking legal advice before agreeing to share or lease a property and documenting that arrangement.