What capital balance do we owe our retiring partner?
We are 3 partner practice. One of the partners is a senior who is retiring in one year. Suddenly we have realised that the other 2 of us have to pay him £160,000 which was his capital balance amount.
To do this, we will probably have to mortgage the surgery. He said the building was valued for £360,000, but he is ready to sell only for £405,000 as he has invested the extra on improvements during last 25 years (which was of course given as the improvement grant by PCT).
Since we remaining partners joined 2 years ago and no mention of this payment of capital balance is made in the partnership agreement, we felt our liability to him was whatever he did not draw from his earnings since the time we joined the practice. Is this correct? Also, is he right in asking for £405,000 (even when he has not purchased the land and built the building himself)?
GP partner, Tyne & WearBob Senior