Lessons to learn when dealing with charity property
I acted for a charity which agreed to sell the owner of adjacent land “a small piece of land which we’re not using” in return for £8,000 plus some new chairs for their hall. They were pretty irritated when I explained that they needed a Charities Act compliant surveyor’s report before they could sell the land. They were less irritated when the report enabled them to negotiate a new sale price of £80,000!
Two other charities have recently been in the news because the Charity Commission was not satisfied that they had fulfilled their legal obligations on disposal of charity land:-
Spiritualist Association of Great Britain
– the Commission’s statutory inquiry concerned the sale of the charity’s property at Belgrave Square. The Commission received information that the property was sold on for £21million by its new owners, shortly after the charity had disposed of it for £6million. The Commission’s report concludes that the trustees failed to fulfil their legal duties and responsibilities towards the charity, and that “the failures and breaches were not minor or technical in nature” but “amount to basic and serious mismanagement”. https://www.gov.uk/government/news/charity-commission-finds-basic-and-serious-mismanagement-in-selling-land-at-charity
Wimbledon and Putney Commons
– in 2015 the Commission examined concerns regarding a potential financial loss to the charity. This related to the granting of an easement over part of the charity’s land to Wandsworth Council to create an access road to develop the former Putney Hospital. The charity has issued a media release reporting, amongst other things, that:-
- a retrospective surveyor’s valuation has identified a loss to the charity in the order of £325,000;
- having taken legal advice, they have concluded that it is not in the best interests of the charity to try to recover the identified loss from the trustees, former trustees or Deloittes; and
- the Commission has appointed an interim manager to help manage the affairs of the charity regarding the Commission’s current concern in relation to the disposal of the 2014 easement and the dispute this has led to within the trustee body.
These cases highlight the need for charity trustees to comply with Charities Act requirements on disposal of charity property. If they do not do so and as a result the charity suffers a loss, the charity trustees may be personally liable to the charity for that loss.
The starting point is to understand that in addition to the underlying duties to act in the best interests of the charity and to avoid conflicts of interest, charity trustees must comply with specific requirements in relation to the disposal of charity property. Those requirements will often include obtaining a Charities Act compliant surveyor’s report and, in some cases, will require a Charity Commission order.
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.
If you would like any assistance in relation to disposal of property by a charity or charity selling property, or would like to be added to our mailing list to receive legal updates and information about training, please contact me.
Jenny Smith – Head of Charities Sector
email@example.com 01905 677052
Tony Gibb, Director in Commercial Property Team
firstname.lastname@example.org 01905 677042