Selling charity land: the do’s and don’ts

16 October, 2017

When it comes to selling land, with property likely to be the most valuable asset on the books for most charities, trustees are under specific obligations to ensure that any disposal is in the charity’s best interests and that property transactions are properly managed.

 

Earlier this year a Charity Commission (CC) inquiry report into the sale of charity land by the trustees of The Spiritualist Association of Great Britain criticised trustees for failing to act in the charity’s best interests.  Nicola Paffard from Cripps Charities Team discusses the case and the report’s findings here.

 

Meanwhile, what can you do to ensure compliance with statutory requirements when selling or leasing land?

 

  • DO think carefully about the reasons for wanting to sell the charity land.  Trustees must be satisfied that any disposal is in the best interests of the charity.

 

  • DO carefully read the CC’s comprehensive guidance note which fully explains the processes that charities must follow when disposing of land.  Among other things, you may be required to:

 

  • Obtain an order from the Charity Commission or from a court allowing you to proceed with the sale;

 

  • Obtain a statutory form of report from a suitably qualified surveyor confirming that the terms of the sale are the best reasonably available in the market;

 

  • Advertise or market the property for sale/lease in accordance with your surveyor’s recommendations.

 

  • DON’T enter into any binding legal document without obtaining legal advice and/or advice from an appropriate surveyor in accordance with CC guidelines.  This includes option agreements where charities agree to sell property at a later date, and lock out agreements where you agree not to deal with other potential buyers for a set period of time.

 

  • DO take time to check and assess the buyer, the offer and the motivations behind it.  As charity trustees you have a duty to ensure that the charity’s best interests are served.  Most transactions will be straightforward, but if something seems too good to be true, it’s usually because it is.  Your advisors will know what is unusual in the market place, and whether any alarm bells should be ringing.

 

  • DON’T solely rely on advisors who have a strong involvement with the other party in the transaction.  Advisors who receive payment from both parties in a transaction (in one form or another) can be useful in brokering a deal, but it is vital that charity trustees also receive independent advice.  Often as part of a charity sale, the buyer pays the fees of the selling charity’s professional advisors, but your advisory team must understand that they act for you alone, and that the interests of the charity are paramount.

 

  • DO choose your advisors carefully – you should always appoint surveyors and solicitors who, like Cripps, have a strong record of expertise in both charity and property law, to help you navigate the transaction and ensure that the steps you take are fully compliant with your duties.

 

Two people shaking hands

 

For advice on your charity property transaction, please contact Nicola Paffard or Rebecca Crosdil who will be happy to talk through your requirements.