Charity Legacy Resources: Getting practical about property legacies

Charities Act compliance checklist

There is a fiddly question for charities left property legacies of whether the Charities Act 2011 applies to a disposal by executors of property that has been appropriated to a charity.

Sections 117 to 121 Charities Act 2011

Sections 117 to 121 of the Charities Act 2011 must be complied with by the trustees of the charity in respect of the disposal of interests in land held by or in trust for a charity. As the executors will be holding the land in trust for the charity/charities on appropriation, the provisions apply. 

For disposals of charity real estate, the consent of the Charity Commission is needed unless one of the procedures for the giving and consideration of appropriate advice is followed or one of the exemptions apply. Usually an exemption will not be applicable.

The consent of the Charity Commission is always needed when the disposal is to a connected party with the charity. This includes trustees and employees, but also relatives and bodies controlled by these individuals.

If it is not necessary to seek the consent of the Charity Commission, the trustees will need to comply with section 119 by obtaining and considering appropriate professional advice on the terms of a sale.

Who should the advisor be? 

The advice must be given by either a fellow or a professional associate of the Royal Institution of Chartered Surveyors (the qualified surveyor).

The charity must also be satisfied that the qualified surveyor has suitable ability in and experience of the valuation of land in a similar location and type to the property.

What form must the advice take? 

The matters which the qualified surveyor must address in his report (the surveyor’s report) are in a statutory instrument, which sets out regulations for the drawing up of such reports.

It is important that the surveyor’s report is prepared in the correct form and that the qualified surveyor understands that he is acting exclusively for the charity and that the disposal is one to which section 117 applies.

The surveyor’s report regulations set out certain questions that need to be addressed. The regulations attempted to be a “one size fits all”, despite applying to a variety of disposals such as sales, leases and the grant of rights.

What should the trustees do once a surveyor’s report has been prepared?

Once the surveyor’s report has been prepared then the trustees should meet to consider and approve it, and to resolve that they are satisfied that the terms of the disposal are the best terms that could reasonably be obtained by the charity.

When should the trustees meet to consider and approve the report? 

The trustees should meet to approve the advice and disposal prior to exchange of contracts.

If the trustees do not then there is a possibility the contract could be held to be void. The effect of this would be the buyer could refuse to complete and the trustees could not force it to do so.

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This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of May 14, 2018.