If you’re considering buying a care home, there’s a lot to think about, including business structure, due diligence, compliance, leasing or purchasing premises, and understanding employment laws.
In this article, we walk you through seven key legal considerations you need to make when purchasing a care home.
Legal considerations when buying a care home
- Business structure
Deciding on the business structure is the first legal fork in the road. Will you operate as a sole trader, a partnership, or a limited company? Each has its own legal, tax, and financial implications – read more about business structures here.
Limited companies are a popular choice in the care sector due to the benefits of limited liability and tax efficiencies. However, the choice depends on your individual circumstances – professional advice is recommended.
- Due diligence
Due diligence is about doing your homework to avoid post-purchase surprises. It ensures you’re making an informed decision and protects you from potential issues that might not be immediately apparent. Skipping or skimming this crucial step can lead to unwelcome surprises down the line.
The process involves reviewing all aspects of the target business, including but not limited to examining the property’s physical condition, understanding existing contracts and liabilities, evaluating employee agreements, and inspecting regulatory compliance records.
- CQC registration
The care sector is heavily regulated. Compliance with regulations set the Care Quality Commission (CQC) is non-negotiable. This involves ensuring your care home meets health and safety standards, staffing requirements, and quality of care benchmarks. Familiarise yourself with these regulations and consider them in your purchase and operational plans.
- Employment law
Buying a care home often means taking on its existing workforce. Understanding the implications of TUPE (Transfer of Undertakings Protection of Employment Rights) is vital. This law protects employees’ rights when the business they work for changes hands. Steering this process carefully is important for staff morale and continuity of care.
- Property considerations
Whether purchasing or leasing the premises, a property lawyer will provide advice on the lease (if applicable), analyse planning permissions, assist with the payment of any property taxes on completion, and advise on any other material factors that will be relevant to your business operations.
For instance, some properties may have restrictions that could affect plans for expansion or alteration, or the terms of the current lease may hinder the medium to long-term operations of the business. Getting this stuff sorted is incredibly important; you will have no care home to run without suitable premises to operate from.
- Funding and finance
Securing finance for your care home purchase requires a solid understanding of the various funding options available and their legal implications. Loan agreements, interest rates, and repayment terms need careful consideration. In some cases, the structure of the deal can have significant cash flow and tax implications, so expert advice is essential.
We recommend seeking expert financial advice on the commercial terms of the lending. Our team is more than happy to provide guidance on the legal implications.
- Contractual obligations
Review and understand all contractual obligations that come with the care home. This includes contracts with suppliers, service providers, and any existing care contracts with residents. Neglecting this can lead to time-consuming and stressful legal disputes and potentially significant financial losses.
Your legal partners when buying a car home
Buying a care home involves several legal considerations. It’s important to think through each step and to seek expert advice where necessary. Understanding the legal requirements thoroughly can help you avoid problems and start your care home business on solid ground.
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