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Rent for ex-partner

Q: I am a GP who has recently left a post of senior partner at a practice. The practice property was owned in equal proportion by the three partners. Since I left I have not received any payment for my share of the property. The remaining two partners are trying to secure a loan on the property in order to pay me. Am I entitled to a share of the notional rent until such time as I am paid for my share in the property?

A: Prior to the retirement, the pro­perty was owned equally by three partners and so in ess­ence the three partners were as occupiers the tenants, and as owners their own landlord. For small partnerships, you just need to bear this factor in mind although, for large partnerships, it is often advisable to act­ually form a tenancy between the partners and the practice so that responsibilities can be clearly divided.

In your situation, when you retired and until you sell your partnership share in the prop­erty, you of course remain as one of the landlords together with your two other partners, but the ‘tenant’ is now the practice (for example, the two partners excluding yourself).

Thus, to be fair, you should indeed receive your one-third of the notional rent and this should continue until you actually sell your share. 

However, along with the rent of course goes the other resp­onsibilities of a landlord and, as the notional rent is calculated on the basis of a landlord bearing responsibility for the under­taking of external decoration and repair, structural repair and the payment of building insurance, you should continue to bear liability for your share in all of these elements.

John Hearle

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