Q. I am taking a lease of a new pharmacy that is being built. How do I protect myself against any problems with the construction of the pharmacy?
Purchasing a new pharmacy provides the opportunity to relaunch a business in new premises. There are also associated risks, as works may be defective or not completed on time.
To overcome such risks, pharmacy contractors should:
- Agree a detailed specification for the construction. Completion of the new pharmacy lease should be conditional on the pharmacy being constructed in accordance with the agreed specification.
- The landlord should be obliged to enforce the construction professionals’ obligations under the building contract in the event of any defects in their work. It is usual for the landlord to be under such an obligation for twelve months from completion of the original works.
- Contractors will usually have no contractual relationship with the construction professionals as the landlord employs them and therefore have no direct recourse against them if there are defects. Collateral warranties from such professionals should be made available to the contractor, so if the professionals have not complied with their duties, the contractor will be able to sue them. Ideally, latent defects in the construction and design of the property should also be excluded from the contractor’s repairing obligations and liability to pay towards any service charge under the lease.
- There should also be a ‘long-stop’ date to be able to terminate the agreement to purchase if the works are delayed.
Purchase agreements of this type can be highly complex and legal advice should be sought as early as possible to protect a contractor’s position.
The above is a general overview and we recommend that independent legal advice is sought for your specific concerns.
Michelle Noble is a solicitor and associate in the pharmacy property transactions team at Charles Russell Speechlys LLP.