A Small Detail with Big Impacts: The address of your pharmacy
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Written by
Sarah Stoddart
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When buying or selling a pharmacy, the smallest detail in a legal document can significantly impact how smoothly the transaction proceeds.
One detail often overlooked is whether the pharmacy address in key transactional documents, such as the contract and the lease, matches the address recorded with the State and Federal regulatory bodies.
At first glance, the specific details relating to the pharmacy address may seem obvious or insignificant however it is important to be aware that even the smallest discrepancy or inconsistency can impact settlement.
When does the issue arise?
For a purchaser, a key condition of the contract is obtaining approval to operate a pharmacy business from both the State and Federal regulator.
Both levels of regulation require the purchaser to submit evidence to demonstrate the purchaser has a legal right to occupy the premises from the stated location. If the address on the lease does not match the address of the premises held with the regulator and/or included in the purchaser’s application, the regulator will raise the issue – resulting in a delay in both obtaining approval and reaching completion.
Why does it matter?
The lease is the primary document demonstrating a person or entity’s right to occupy a premises.
Each State and Territory has different legal requirements for how leases are formalised and transferred. There is no requirement for leases be prepared by a lawyer with retail leasing expertise, which means the documents vary in form, substance and, unfortunately, attention to detail.
By way of example, in some jurisdictions, a lease may describe the premises only by Lot and Plan number or Folio and Volume number, with no street address included in the lease. The regulators, however, only keep records of the street address. Therefore, when the street address is missing from the lease, the regulator will not progress an application until they are satisfied the lease is for the actual premises. This often means having the landlord amend the lease or assist with satisfying the regulators – and that is not something all landlords are prepared to do.
Another example is inconsistency in shop numbers. Consider how your pharmacy is referred to in documents as “Tenancy A” and “Shop 1” are not the same in the eyes of the regulator.
If the regulators are not satisfied the purchaser has a legal right to occupy the premises, will not be granted. In these circumstances, the transaction may be delayed or at worst, terminated.
The smallest difference in detail can have a big impact. One letter, one number, or inconsistency in the description of the pharmacy address can be enough to delay a change of ownership application.
How to deal with inconsistencies
To avoid these issues, both parties and their advisors should check key documents early in the transaction to ensure consistency across all documents. If inconsistencies are identified, they should be rectified as soon as possible. Better still, a seller should ensure consistency across all documents and records before placing their pharmacy on the market.
Final takeaway
It is crucial pharmacy owners ensure the pharmacy address is consistent across all documents relating to the pharmacy business. This is not just an administrative formality. It underpins a critical component of the transaction and if not done correctly, will result in an administrative headache!
By ensuring consistency early in the matter (or, for a seller, before the business is put up for sale), parties can save considerable time, avoid unnecessary costs and proceed to completion with certainty!
This article is intended to be for general information only. It does not constitute legal advice nor does it establish a relationship of client and lawyer. Specific circumstances or changes in law may vary the accuracy or applicability of the information published. We recommend seeking specific legal advice particular to your circumstances before taking any action, or refraining from taking any action, on any issue dealt with in this article.