The Regulator for Charities in England and Wales
(Version March 2007)
Many charities use the services of the Official Custodian for Charities (the Official Custodian) to hold the title to land on their behalf. This helps charities to avoid many of the legal problems which can arise when a charity owns land, particularly if the charity does not have the status of a company. This guidance is intended to explain to charity trustees and their advisers the role of the Official Custodian. Our booklet “The Official Custodian for Charities’ Land Holding Services” (CC13) goes into more detail about how to apply to use the Official Custodian’s services.
Usually referred to as the Official Custodian, the holder of this office is appointed by the Charity Commission (the Commission) under section 2(2) of the Charities Act 1993. A principal function of the office holder (who is normally a member of the Charity Commission’s staff) is to act in a similar role to that of a custodian trustee for charities in respect of any charity land which is placed (or “vested”) in the Official Custodian by means of an Order or Scheme made by the Charity Commission or, in rare cases, by the High Court. Another role is to hold title to cash and investments as a protective measure during the carrying out of certain formal enquiries. There is no charge for either service.
The post was created by the Charities Act 1960 and replaced the separate roles of the Official Trustee of Charity Lands and the Official Trustees of Charitable Funds.
A charity’s interests in land may be vested in the Official Custodian under section 21 of the Charities Act 1993. The primary advantage of vesting land in the name of the Official Custodian is that it avoids having to change the details of ownership of the land every time there is a change in trusteeship of the charity. This is helpful to unincorporated charities (such as trusts and associations) : charities which are companies, or otherwise have a form of corporate status, do not need this sort of service because title to property can be held in the charity’s own name, rather in those of the individual trustees.
The Official Custodian usually allows the charity trustees to keep or have control of the land certificates or title deed to land which has been vested in him.
The Official Custodian cannot take part in managing land vested in him or her.
Charity trustees keep all the powers and duties of management, and will account for the land (and buildings) in their own financial statements. They will still, for example, have to:
In addition to having a sound knowledge of the purposes and activities of the charity, the procedures which govern the charity trustees' actions, the organisation and funding sources of the charity, it is the responsibility of the charity trustees to have a knowledge of the nature and condition of all the charity’s property and resources (land, buildings, investments and cash).
Charity trustees are being encouraged to monitor the land and property belonging to their charity. They should be aware of the need to survey the land placed under their trust, e.g. by checking whether any part of the charity land is, or has been, encroached upon or “fenced off” to form part of property of adjoining owners, or occupied by squatters.
If, as is usually the case, the charity trustees have the powers to sell or lease the land, they can often do so without involving the Official Custodian. See also item 3 below.
In short, vesting charity land in the Official Custodian does not change any of the powers, duties or responsibilities of the charity trustees.
The Official Custodian does not maintain a register of land that is vested in him.
Where charity land (and this includes the buildings thereon) is vested in the name of the Official Custodian to hold in trust for a charity, he is not liable for any debts arising from the act or default of the charity trustees. See section 22(6) of the Charities Act 1993 and section 4(2)(d) of the Public Trustee Act 1906.
The charity on whose behalf the Official Custodian holds the land (and buildings) remains liable for the debts. The charity trustees of that charity remain responsible for the payment of the charity's debts and it is they to whom enquiries about payment of the charity's debts should be addressed. If that charity is registered with the Commission, details of the correspondent for the charity trustees may be available for viewing on the Commission's website.
The interest in the land must already be held by the charity before it can be vested in the Official Custodian. The Official Custodian cannot be a party to any conveyance, transfer, lease or other deed which concerns the acquiring of an interest in the land before vesting takes place. To apply for an Order, use our application pack, CSD-1343 - Vesting of Land in the OCC. You can obtain this from our Contact Centre on 0845 300 0218 between 08:30 and 18:00 hours weekdays. Our publication “The Official Custodian of Charities’ Land Holding Service” provides further guidance on this issue.
Where the charity’s main assets are not limited to land, its charity trustees may wish to consider incorporating the trustee body under Part VII of the Charities Act 1993. The main advantages of incorporation of the trustee body are:
For further information, see CC43 “Incorporation of Charity Trustees” and also “OG 50 - Incorporation of Charity Trustees”.
A major function of the Official Custodian is to hold title to land on behalf of charities. The only circumstances in which other types of charity property, such as cash, investments and other types of assets (known as “personalty”), can be held by the Official Custodian are where the Commission (or the Courts) makes an Order for the protection of the charity under section 18 of the Charities Act 1993. The primary aim of the Official Custodian in these cases is to safeguard that property until authorised by the Commissioners or the Courts to transfer it back to the charity trustees or their appointed representatives.
When in the form of cash, it is either held in a current account with a bank or building society or, for more significant sums, for a longer period in a deposit account there. When in the form of securities, the Official Custodian will hold these unless he or she is instructed to sell them by the charity trustees or their appointed representatives. Where necessary, the Official Custodian uses stockbrokers for this purpose.
The Official Custodian has no power to formulate any investment policy or to make any investment decisions on behalf of any charity. Where funds are held by the Official Custodian, it is for the charity trustees to decide and to instruct the Official Custodian how the funds should be invested. In the absence of such instructions from the charity trustees, the funds will be placed in a no-notice instant access deposit account with a bank or building society.
The Accounting Officer for the Commission is ultimately accountable for the work of the Official Custodian.
Section 2(6) of the Charities Act 1993 requires the Official Custodian to prepare a statement of accounts for each financial year for the funds he or she is holding for protection.
The Official Custodian has to produce annual accounts on a receipts and payments basis. He or she must follow proper financial procedures (including any relevant Treasury Guidelines), keep accounting records and safeguard all assets under his or her protection. The Commission lays down the details of these accounting responsibilities.
The Official Custodian’s accounts are not the accounts of individual charities – these are the responsibility of the charity trustees of the charities in question.
Section 2(7) of the 1993 Act requires the accounts prepared by the Official Custodian to be examined and certified for audit purposes by the Comptroller and Auditor General, of the National Audit Office.
In addition, the Commission has internal auditors who operate to standards defined in the Government Internal Auditing Standards. This is done using the Commission’s risk framework which includes those risks associated with the Official Custodian. All risk management procedures operated by the Official Custodian are documented.
Regular review of the effectiveness of the system of internal control is informed by the work of the internal auditors, by those Commission staff who have responsibility for the development and maintenance of the internal control framework, and by comments made by the external auditors in their management letters and other reports.
Up to the accounts for year ended 31 March 2006, the Official Custodian’s accounts were included in the Charity Commissioners’ Annual Reports.
Under section 2(9) of the Charities Act 1993, the Commission shall publish and present a copy of the Official Custodian’s accounts to the Minister who tables it before Parliament.
The Official Custodian must be made a party to any conveyance, transfer, lease or other deed which concerns the disposal of land vested in him or her. See OG 54 Disposals of Charity interests in property sections C1, C2 and C3 for further information about the requirements and the wording to use.
Whether the Official Custodian is actually required to seal the document to which he or she is party depends on the section of the Charities Act 1993 under which the vesting order was originally made. If it was vested in the Official Custodian under :
Where a public authority intends to acquire land (or an interest in land) that is vested in the Official Custodian in trust for a charity and it proposes to serve a statutory notice of such intention, the public authority should serve the statutory notice of its intention on the charity trustees of that charity, notwithstanding the land is vested in the Official Custodian. It would be helpful if the statutory notice could also identify or name the charity for which the Official Custodian is holding the land.
Whether or not the charity’s interests in land are vested in the Official Custodian, charity trustees are encouraged to consider registering the charity’s title to the land with the Land Registry if it has not yet been registered. Many charities have owned land for a long time and this land may have a title that is unregistered with the Land Registry.
The main benefit of registering title to land is that a registered title is guaranteed by the state. The owner of registered land is also better protected against squatters than the owner of unregistered land.
Whilst there will inevitably be costs for charities seeking registration of title to their unregistered land, charity trustees should consider the benefits that registration can bring to the charity.
To help with the process of registering title to previously unregistered land, each of the Land Registry’s 24 offices has a Register Development Manager to help make the process as straightforward as possible. More information, including contact details for Register Development Managers, can be found on the Land Registry website www.landregistry.gov.uk/register_dev. Additional information on applications to Land Registry can be found in Practice Guides which can be viewed or downloaded from the Land Registry website.
Enquiries relating to vesting land in the Official Custodian and disposing of land that is already so vested should be addressed to the Specialist Casework Division at the Charity Commission – our website contains contact details.
Our Investigations Divisions deal with formal inquiries and the use of our protection powers to vest property (including cash and investments) in the Official Custodian.
All other enquiries relating to the Official Custodian should be addressed to the holder of the office at our London address.
For further information about these web pages generally, call 0845 300 0218. The number for hearing and speech impaired callers using a minicom is 0845 300 0219.