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Property transaction and charities

Reasons to choose Wilson Browne

There are additional obligations imposed on charities in relation to property transactions.

The Charities Act 2011 sets out a procedure which must be followed and which provides protection not just to the trustees of the charity but also to the other party. If the procedures are not followed the transaction can be set aside. The procedures require the trustees to ensure that they are getting the best deal available. There are certain exceptions to this, but generally speaking, the most common way for charities to buy or sell land is through the procedure by which they show that the proposed transaction is the best deal available.

A charity must instruct a qualified surveyor (who can only be acting for the charity in relation to the transaction) to prepare a written report which deals with the advertising of the property and recommends that the transaction is the best that can reasonably be obtained for the charity. The exact requirements for the report are set out in the Schedule to the Charities (Qualified Surveyors’ Reports) Regulations 1992 (SI 1992/2980) (Qualified Surveyors’ Reports Regulations).

In addition, the property documentation must set out a statement which shows which procedure is used and a certificate that the procedure has been followed.

A recent case investigated whether a sale was still valid even if the procedure had not been followed completely: David Roberts Art Foundation Limited v Riedweg [2019] EWHC 1358 (Ch) (6 June 2019) concerned a sale by a charity of a freehold property. Unfortunately the surveyor’s report did not contain everything that was required and the question for the court was whether this failure rendered the transaction void. The court decided that where there has been some attempt to comply with the requirements, the over-riding principle is whether the terms of the disposal are the best that can reasonably be obtained by the charity. The court decided that the transaction should still stand on that basis but did not make a judgment on the specifics of this case as insufficient evidence had been presented as to the marketing of the property and the trustees’ decision making process but it is reassuring that a small technical error will not result in a transaction being set aside.

The case has however highlighted the importance of charities using solicitors and surveyors who are experienced in dealing with charities and are aware of the technical specifications of their advice to charities.

Should you need any assistance with charity land transactions contact our Property team on 0800 088 6004.

Nina Wilson

Posted:

Nina Wilson

Partner

Nina is a Solicitor and Partner of almost 20 years experience advising clients on commercial property law. A Legal 500 recognised Lawyer, Nina has acted in multi-million pound acquisitions and development agreements.