GP Partner Leaving or Joining – What Do I Do About the Practice Premises?
Date: 16/10/2024 | Healthcare
Many GP Practices still trade under the traditional partnership model. Where a GP Practice own their premises, the title deeds will almost certainly describe the owners as being “Dr X, Dr Y and Dr Z as the Partners of and Trustees for the Firm of X Medical Practice”. There are important legal reasons for doing so but for GP Practices, they should view their Partners as holding two ‘hats’ – one as a Partner of the Firm and one as a Trustee for the Firm.
Where a Partner retires or resigns from the GP Practice (or where they are expelled), GP Practices may very easily encounter problems when they discover that despite the retiral, resignation or expulsion being applied in accordance with the Partnership Agreement, they remain on the title deeds beyond their retiral, resignation or expulsion. This is because wearing their trustee hat, they must separately sign a Minute of Resignation and resign as a trustee. They will remain so unless they die.
The reverse scenario applies for when a Partner joins a GP Practice. If they do not sign a legal deed known as a “Deed of Assumption and Conveyance”, they do not become a legal owner of the premises.
For day-to-day purposes, this is not necessarily fatal. Where the exit was relatively harmonious, the GP Practice can always ask these people in the future to sign the relevant deeds. The financial interest in the building is a matter for the Partnership accounts and the Partnership Agreement which should deal with the shares in which a Partner owns the building.
It has historically been the case when Partners came and went that the title deeds were not changed. As a consequence many GP Practices find themselves in a position where long-since retired Partners remain named on the title deeds. This is risky because if the GP Practice comes to sell the premises or requires new financing, these persons will need to be found to sign a Minute of Resignation (unless they have died). This can be a time-consuming exercise as you cannot guarantee that a former Partner has stayed in the same place that you once knew them to stay or remains well-disposed to the GP Practice.
The requirement to act when there are partnership changes has been significantly affected following the introduction of the Register of Persons Holding a Controlled Interest in Land (“RCI”). The position is more complicated. Where a Partner joins a property-owning GP Practice but is not named on the title deeds (regardless of whether they are classed as a property owner or not in the partnership accounts), they will now require to register an entry in RCI when the title deeds are not updated.
By way of a general rule, the GP Practice must now consider the title deeds carefully when there are partnership changes. If your GP Practice is property-owning, you should, in particular, consider the following:
- When a Partner leaves, consider whether it is sensible for them to sign a Minute of Resignation on or around their departure date.
- When a Partner joins the property-owning practice, will they be added to the title deeds? If not, an entry in RCI will be required (failure to comply is punishable by a fine of up to £5000).
If you require any assistance with the title deeds to your GP Practice or want to discuss any other premises issues, please contact our Healthcare Team.
