Goodman Grant’s Nataleigh Adamson considers property due diligence
You have already found the perfect dental practice, and there’s no longer a question of whether you will purchase the property, but how much you are willing to invest in it. As an experienced solicitor will tell you, however, it is vital that your heart does not overrule your head at this stage – particularly as carrying out sufficient property due diligence will be one of the most important steps towards investing in your dream dental practice.
Although it can be a lengthy process, due diligence will help you identify any potential risks involved in purchasing the property, providing you with enough time to decide how best to deal with them, before making any major legal commitments.
There are some factors to consider as part of the property due diligence process – one of the most substantial of these factors being that a commercial property to be used as a dental practice may not necessarily be fit for purpose. This could be because the property is poorly designed, inadequately built, or has quickly become obsolete due to technological or legislative advances.
These issues may not be obvious upon an initial inspection, so it is essential to employ a professional surveyor who can accurately assess whether the property you are hoping to purchase is, in fact, structurally sound.
Planning consents and building regulations
All documentation should be obtained that includes information of any building work that has been done to the property. In an ideal world, planning consents and building regulation completion certificates regarding any alternations carried out on the property would be readily available from the seller.
However, the reality is that a property owner may not have been aware that these were required and thus, is unable to provide them. There are several ways that this can be dealt with, depending on the quality of the work, when the work was carried out, or various other factors. Nevertheless, it is essential not to contact a local authority about any work completed, especially as the options available to you as a buyer are reduced upon contact being made.
Under the Control of Asbestos Regulations 2012 – which came into force on 6th April 2012 – all commercial properties built before 2000 require an asbestos survey to be carried out, whether you think asbestos is present or not. Any properties built after 2000, or those properties that have been fully refurbished since then, do not require a survey.
It is quite often the case that an asbestos survey has not been done – particularly if someone has owned a property prior to the asbestos regulations coming into force. There are various types of survey that could be performed, but the most common are “management surveys”, which will identify any potential asbestos-containing materials and recommend how these can be managed.
Energy Performance Certificates (EPCs)
All transactions will require an EPC, which will likely be arranged by the seller if they have an agent. However, if a practitioner is selling privately (i.e. to an associate), then this may be overseen. It is important to bear in mind that lenders will require this to be done. Under Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, new leases and renewed leases cannot have an energy rating of F or G, as of 1st April 2018.
From April 2023, this will apply to any existing lease with an F or G rating. In limited circumstances, the property may be exempt and if a valid exemption applies, the landlord will then register the exemption on the PRS Exemptions Register.
There’s no doubt that purchasing a dental practice is an exciting venture, but it can be fraught with many challenges resulting from inadequate property due diligence. Essentially, you should be doing your research and asking questions before you commit to investing in a property. You may find that the risks of purchasing a specific dental practice are significant and upon doing so, you could then decide whether you want to withdraw from the transaction process or renegotiate the sale price.
At the very least, you will have the flexibility to effectively manage any risks, but if you are ever in doubt, then it is always best to seek guidance from a trusted team of dento-legal solicitors.