Charitable company selling land
Background:
The trustees of Greendoor Ltd, an incorporated charity, decided to sell their current accommodation and move to smaller offices. The Memorandum and Articles, the governing document of the charity, had the usual clauses found in company documents giving them power to sell their charity land.
What the trustees did:
The trustees contacted their solicitors to act for them. Before they even thought about entering into a contract for the sale, the trustees then contacted a local qualified surveyor to make a report that complied with the legal requirements (see appendix K2 of Sales, leases, transfers or mortgages: What trustees need to know about disposing of charity land (CC28)). He advised them to advertise with two local estate agents who dealt mainly with commercial properties.
The trustees considered the surveyor's report and valuation and advertised the property. After reviewing the offers, the trustees decided to accept the one that seemed to give the best terms that they could reasonably expect to get in the circumstances. They instructed their solicitors to draw up the contracts, including the statements and certificates needed in the documentation.
Did the trustees need our consent?
No they didn't because:
- the governing document gave power to dispose of property
- they were not granting a lease to a connected person
- they were able to take, and act upon, advice from a qualified surveyor
- they were able to advertise in the way advised by their surveyor
- they were satisfied that they got the best terms reasonably available
The trustees did not even need to inform the Charity Commission of their plans.
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Charity selling land and using proceeds to buy replacement land
Background:
The Village Riding Trust provides stabling and riding facilities for the people in the village of Gribble Green. Over the years the village had grown in size and the trustees decided that location of the stables was no longer as convenient as it had been originally. The trustees planned:
- to sell their existing stables
- use the sale proceeds to buy land in a better location elsewhere in the village
What the trustees did:
The trustees looked in their governing document and found nothing that prevented the sale. They were told by their solicitor that they could, like many charities, sell using the power in the Trusts of Land and Appointment of Trustees Act 1996.
If the trustees had been planning not to replace the land, they would have had to:
- prepare a public notice that explained their plans and reasons
- consider any responses they received before they made a decision whether to proceed or not
However, as they were planning to replace the land there was no need to do this.
Their appointed a qualified surveyor who:
- made a report
- provided a valuation for the trustees to consider
Their next step was to advertise, according to their surveyor's advice, to try to get the best terms from the sale.
Having previously identified a suitable site for their new riding centre, they entered negotiations to buy the land. When the sale of the original stables went through they completed their purchase using the proceeds from the sale.
Did the trustees need our consent?
No they didn't. Even though the land the trustees were selling was 'designated' land – it had to be used for the purposes of the charity – they could still proceed without consent from us because they:
- were replacing it with other, suitable, premises
- had complied with all the requirements to proceed without needing to involve us
If the trustees had decided not to replace the land then it would be unlikely they could continue to fulfil the purposes of the charity. They would then have had to give public notice of the sale and also come to us for a Scheme to change the purposes of the charity.
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Charity selling to a trustee
Background:
The trustees of the Newtown Minibus Fund owned a field that had been given to the charity some years before. It was in the middle of farmland and, although it brought in a small rent each year, was not much use so they decided to sell it.
One of the trustees offered to buy the field as it was next to his farm and he could put it to good use.
What the trustees did:
The trustees knew that, as it was a fellow trustee who wanted to buy the field, they would need consent from the Charity Commission.
Whenever they discussed they made sure that the trustee concerned always left the meeting to:
- avoid a conflict of interest
- so he didn't influence the thinking or decision making of the other trustees
The trustees employed a qualified surveyor to report on the property and value it. They then followed the advice of the surveyor by advertising the lease to see:
- what other offers they might receive
- whether the offer the garden centre had made was a reasonable one
Next, the trustees downloaded the necessary application form and notes from our website and completed it.
On the application form they told the Commission:
- the value of the land as set out by their qualified surveyor
- information about the advertising they had carried out
- offers they had received as well as the offer from the trustee
- that they wanted to accept the offer from the trustee because it was about the same as any other they had received but he was able to complete and make the sale quickly, allowing the charity access to the funds sooner than if had they sold to one of the others in the market
Did the trustees need our consent?
Yes they did, because the sale was to a ‘connected person’.
In this situation it's likely we would have given our consent for the sale to go ahead because the trustees:
- had done all the things they could to be sure the connected person did not influence them
- they had made the best efforts to get the best terms for the sale
We would not automatically give consent to ‘connected person’ sales - we consider each case on its merits.
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Charity selling land without professional advice
Background:
The trustees of the Old Stagers Theatre Trust wanted to sell a corner part of the premises they owned to a developer, allowing him access to a new estate he was building. They negotiated with the developer, agreed a price for the piece of land and exchanged contracts.
What they should have done:
The trustees should have complied with the requirements before they entered into the agreement to sell the land. They should have:
- got a surveyor's report
- advertised to try to get the best terms
Did they need our consent?
Yes they did, because they did not take, and act upon, a surveyor’s advice.
The trustees should have gathered all the relevant information before entering the agreement to sell. Because they did things in the wrong order, the trustees now had to come to us for consent to finalise the sale of the land to the developer.
We had to make an Order allowing the sale to go ahead.
This meant that:
- the transaction was held up
- the trustees didn't get their money for the sale as soon as they would have liked
It also risked the developer pulling out of the sale and trying to find another access to his development. This would have resulted in loss of funds the charity was expecting to gain from the sale.
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Charity selling land but unable to get the advice they needed
Background:
Inner City Playgroup had a small plot of land left to them in the will of an old lady who had once been involved with the charity. The trustees planned to sell the land as it wasn’t any use to them – it was barren waste land in the middle of a remote moor in the south west of England.
What they needed to do:
This appeared to be an easy sale - the trustees just had to get a surveyor to value the land, advertise and then enter the agreement to sell for the best terms they could.
The problem was the trustees couldn’t find a qualified surveyor with enough experience of dealing with this sort of property or of how this sort of land sold on the market.
Did the trustees need our consent?
Yes they did – or at least, they needed to talk to us about it. This was because they couldn’t get a surveyor's report, which meant that they couldn’t comply with the legal requirements.
We could do one of these things:
- make an Order allowing the trustees to sell the land without a surveyor's report as it would be too difficult to find a surveyor
- allow the trustees to proceed without our further involvement, if it was obvious the plot of land was small and not worth much
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