“Going back to school…
…can be expensive, especially if the owner of a former school site has not taken into account the risk of reverter under the School Sites Act 1841.
That 1841 Act was passed to encourage the donation of land for certain charitable purposes, the idea being that once land donated was no longer used for such purposes, ownership of it would revert to the original owners or their descendants.
Owing to difficulties with the way in which the 1841 Act operated in practice and following a Law Commission report published in 1981, the Reverter of Sites Act 1987 was passed which simplified matters. The 1987 Act created a trust in favour of the original owners (or their descendants) where the right of reverter applied.
A House of Lords decision handed down in 2005 regarding a Church of England School which had been established in 1866 and closed in 1995 held that, on the facts of that case, the right of reverter applied and so, on a sale of the former school site the net proceeds of sale were due to the descendants of the original grantor. In reaching its decision the court took a broad view of whether or not the school had ceased to be used for the relevant charitable purposes.
This year, a further case on the subject has again demonstrated the court’s preference to take a broad view of matters involving the reverter Acts. This case turned on a technical issue regarding the interpretation of s14 of the 1841 Act. Briefly, a local authority which operated the subject school sought to build a new school on an adjacent parcel of land, borrowed funds to do so and then sold the site of the former school to raise funds to pay down the loan. The court was asked to consider the timing of the transactions and whether or not the right to reverter had arisen. This time the court came out in favour of the current school operator/owner and not the descendants of the original owner, but it does demonstrate that these issues and sites are out there and being litigated over.
There are potentially thousands of sites which may be affected by the reverter Acts and it is not only school sites that are affected. Sites donated for other charitable purpose are also affected such as places of worship