Selling up with a lease with time to run
I want to retire and get rid of my pharmacy. I currently have a lease which has about 5 years left to run. How can I try and get rid of my pharmacy lease?
If your company owns the pharmacy, you can either sell the shares in the company (which would then transfer all the assets of the business via the company) or the separate assets.
On an asset sale, the buyer chooses which assets to purchase from your business and this can include the pharmacy lease, NHS pharmacy contract, goodwill, staff and stock.
With a lease with a short term left to run, a buyer will usually want to negotiate for a new longer lease to be granted direct to them by the landlord (with the existing lease being formally surrendered) but they may take an assignment of your existing lease in order to negotiate a new lease going forward.
Your lease will set out any conditions that need to be satisfied for an assignment and this usually includes getting the landlord’s consent. You may also have to provide an authorised guarantee agreement (AGA) guaranteeing the buyer’s obligations under the lease until either the end of the term, or, they assign the lease.
If the buyer does not want your lease you will have to surrender it. This is a consensual arrangement between you and your landlord who is under no obligation to accept any proposals that you make and may demand a payment for agreeing to end your lease early. You will also need to agree if any payments such as loss of rent are due and who will pay the legal costs. If you only have 5 years left to run on your lease, the landlord may be keen to negotiate a longer lease with your buyer and take a surrender of your existing lease.
You should review the terms of your lease and then to agree with the buyer as early as possible if they will buy your business by way of a share or asset purchase. If an asset purchase they will need to agree whether to take an assignment of your lease or if you need to surrender it and they take a new longer lease instead (and they will need to agree terms with your landlords to do so).
Legal advice should always be obtained early on to avoid any delays in the sale process.
This article was written by Jennifer Berritt. For more information please contact Jennifer at firstname.lastname@example.org or on +44 (0)1483 252 578
This article was first published by P3 Pharmacy on 23 May 2017
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