Land and buildings are often the most valuable assets owned by charities, but also one of their biggest liabilities and potential headaches. It is crucial that charity trustees consider their property dealings carefully, as there are important legal rules that apply, particularly on disposing of property.
Key points to remember:-
1. What is in the best interests of the charity
This is always a key concern and all the rules are designed to supplement this principle. The charity trustees need to show they have obtained sufficient evidence to make an informed decision on any dealings with their property.
Consideration should be given to:-
1. Value of the property asset;
2. Any onerous or unusual conditions or restrictions;
3. The ongoing running costs and the charity’s ability to meet those.
2. Conflicts of interest
Charity trustees are under a duty to ensure that any conflicts of interest or loyalty are identified. Remember the disposal (sale, lease or certain other transactions) to a charity trustee, a family member of a charity trustee, a business associate of such persons or to a trading company for the charity must first have Charity Commission approval.
3. Legal requirements for a qualifying surveyor’s report
This is usually required in accordance with regulations where charities are looking at disposing of property whether by sale, lease over seven years or certain other dealings. You should take advice to ensure the rules are followed.
4. Particular trusts that apply to land
Ensure you know and properly record whether land or buildings are held on a special trust or as permanent endowment as this will affect whether you can sell the properties or how you deal with the proceeds of sale. In addition, certain sale of land requires public notice to be given of those sales.
5. The importance of early advice
Make sure you get professional advice early on so that the charity trustees can satisfy their legal responsibilities, keep the costs down and ensure that they get the best deal for the charity.
If you have any questions please contact 01726 74433 or enquiries@stephens-scown.co.uk