If a charity is selling a property there are various legal formalities that it must comply with in order that that sale cannot be challenged. The sale contract needs to confirm that it has complied with the provisions of the Charities Act 2011 and the trustees of the charity must have advertised the property (or obtained advice that this is not needed) and obtained a valuation to show that the terms of the disposition were the best reasonably obtainable.

In a recent case, a charity contracted to sell a property, then rescinded the contract when the buyer failed to complete and sought a judgment that the contract had been validly rescinded and for the balance of the deposit. The buyer argued that as the Charity had not complied with the Charities Act formalities, the contract was unenforceable. The court held that as the necessary Charities Act declaration was contained in the draft transfer (which was annexed to the contract) this was sufficient to satisfy the requirement. However, although failure to advertise in itself would not necessarily mean the trustees had not complied with the requirements of the Act the trustees did need to demonstrate how and why they were satisfied that the terms of the sale were the best that could be reasonably obtained and they had not done so in this case. Accordingly, the application was refused.

This case demonstrates the need for Charities to comply with the requirements of the Charities Act when disposing of property.

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