Charities thinking about selling or leasing their properties need to remember that there are certain important procedural requirements they have to follow Jonathan Crook of Rawlison Butler's Commercial Property Team looks at the rules specific to charities.
If a charity is selling a property, or granting a lease for more than 7 years, to a party not connected to the charity, the charity must:
- obtain a report on the disposal from a qualified surveyor acting for the charity,
- advertise the transaction for an appropriate period, and then
- decide that the terms proposed for the disposal are the best that are reasonably obtainable for the charity.
The report
The regulations are clear about which matters need to be
addressed in the detailed report. In particular, the report
must contain measurements, details of any headlease, details of the
state of repair of the property, advice on whether any works or
alterations should be carried out before completion and the
surveyor's advice on whether a delay in completion is
advisable, the type of advertisement that would be appropriate and
the value of the property. A section reporting on title
matters is also required (where solicitors should generally
assist).
The report will need to be obtained before completion of the sale
or lease -or, if applicable, before exchange of contracts for the
disposal.
Advertising
Advertising is usually vital to ensure that a proper value is
obtained for the land. However, there are circumstances where
it may not be needed,for example, where a lease protected by the
Landlord and Tenant Act 1954 is being renewed.
Exceptions
There are various exceptions to these rules, in particular where
a disposal is made by one charity to another charity at less than
the best price that can reasonably be obtained. In addition,
exempt charities are not covered by the legislation - for example,
the British Museum and some universities, university colleges and
galleries.
Also, where a charity grants a lease for seven years or less, the
main difference is that the formal report containing the above
matters is not required,although a charity should still seek advice
on the transaction from a surveyor.
Extra provisions in legal documents
Charities also have to ensure that their solicitors include in the legal document for the sale or lease a statement about the application of the relevant legislation and confirmation that the charity has complied with the above requirements. Similar provisions apply to an agreement for such a sale or lease
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
