When purchasing or selling a dental practice, there are several legal requirements to be considered – find out how to build a strong foundation for your premises.
In the majority of dental practice sales or purchases, the primary focus from the outset is on the goodwill and assets, with only a side mention of the practice premises. This is understandable, as the bulk of the value of the practice tends to lie in the goodwill.
However, without a suitable premises, a dental practice can’t operate. It is equally important in the context of a dental practice sale or purchase to ensure that the property arrangements are in order. In our experience, it can often be the property side of a deal that can cause issues at the time of a sale or purchase, if not properly addressed early on in the process.
A failure to properly consider and tackle common property issues early on in a deal can result in the transaction being delayed, or can involve additional costs to the parties involved. In the worst case scenario, it may ultimately prevent the sale or purchase from happening altogether. However, with some forward planning a number of potential issues can be addressed.
Local authority consents
Whenever alterations are done on any building (including a dental practice), it is crucial to ensure that any applicable local authority consents, known as building warrants, are obtained for the works being undertaken.
Building warrants are not the end of the road however. Once the various alterations are completed, it is equally important to ensure that the local authority comes out to inspect them to ensure that they have been carried out in line with the building warrants and issues a completion certificate to confirm this.
The majority of buyers (and any lenders sitting in the background) will look for copies of any building warrants and related completion certificates as part of their due diligence exercise, so it is sensible to ensure your paperwork is up to date and complete ahead of any planned sale.
If you didn’t get all of the necessary paperwork at the time, there is the option to have the local authority review the works afterwards and issue what is known as a letter of comfort. However, it isn’t advisable to rely on this being issued quickly – the local authority may look for further works to be carried out to the premises to bring them up to current building standards, as opposed to the standards which were in place at the time of the works.
In addition, if part or all of the premises was previously used for another purpose (such as a house, shop or office) then planning permission for change of use is also likely to be required, alongside any building warrants and completion certificates.
Statutory requirements
In nearly all cases (and especially if a buyer is taking lending), an energy performance certificate (EPC) will be insisted upon for the premises. It is a legal requirement for an EPC to be provided by the seller of a commercial property, which includes dental practices. It can be obtained reasonably easily and quickly, and is not hugely expensive. EPCs are valid for 10 years.
It is also fairly likely that a buyer (and their lender!) will look for an asbestos report. Since 2006, all commercial premises should have an asbestos report. In practice, we tend to find that not a lot of sellers are aware of this obligation, and it can lead to an asbestos report having to be obtained quite late on in the sale process. It would therefore be best practice to have an asbestos report ready and available at beginning of the sale process.
Plan ahead
All of these potential issues are capable of being avoided with good planning and, if you are thinking of selling your practice, we would advise engaging with your solicitor as early as possible in the process to minimise the risk of any delays or complications further down the line.
The Thorntons dental team would be happy to help provide specialist advice on any property related matters. Get in touch with one of the team today on 03330 430350 or find out more about the team.
This article is sponsored by Thorntons Law.
