When he reviewed charities law in 2012, Lord Hodgson of Astley Abbotts, found that charities “faced a number of historic obstacles under the current law. These unnecessary burdens on trustees act like barnacles on a boat, causing a drag when all should be plain sailing.” There is also risk that those obstacles may cause charity trustees to make unintentional mistakes.
The Law Commission issued its report into technical charity law issues last Autumn.
The report was welcomed by Lord Hodgson:-
“Today’s report from the Law Commission is important. Although its recommendations may appear to be highly technical, cumulatively I believe they would have a huge impact on the sector, helping trustees to work effectively in modern-day conditions.
“Since the recommendations have now been consulted on extensively and are approved of by the sector, I hope the government will find time to implement them speedily.”
Whilst we wait for the government to respond, we look at one area where problems do arise and some of the recommended changes.
If charity trustees do not comply with the charity’s governing document and obligations under the Charities Act 2006 on a property disposal, the transaction may be void, voidable or, if valid, could result in the trustees being liable for any loss arising to the charity as a result of breach of trust and legal obligations.
Where charity property is correctly registered with the Land Registry, there is an entry on the “title” to the property which alerts both the charity trustees and any buyer to the need to comply with charity law and governance. Where property is unregistered, which is not uncommon when property has been held by a charity for a long time, this may be overlooked if the legal professionals acting in the transaction are not familiar with charity law matters.
Generally, charity trustees must obtain a “Qualified Surveyor’s Report” when disposing of charity property. There are concerns about the cost of such reports; the difficulty of finding people qualified to prepare them; that the content is not always as helpful as it could be and that charities are not able to take advantage of relevant in-house expertise.
The Law Commission recommendations include that:-
- the Qualified Surveyor Reports which charity trustees must usually obtain be simplified (which may reduce the cost of the report) and include comments on any offer already received;
- that, as well as RICS Surveyors, Fellows of the National Association of Estate Agents and Fellows of the Central Association of Agricultural Valuers be qualified to provide Charities Act reports; and
- charity trustees, officers and employees of a charity who hold relevant qualifications be able to provide Charities Act reports.
Other relevant articles:-
We have wide experience of acting for charities on property disposals, from simple transactions to more complex arrangements involving developers and construction projects. We are also able to recommend surveyors who have experience of preparing Charities Act compliant reports.
Please contact either:-
Jenny Smith – Head of Charities and Not for Profit Sector
firstname.lastname@example.org 01905 677052
Tony Gibb, Director of Commercial Property Team
email@example.com 01905 677042