Property Issues for Trustees

1. Property Issues for Trustees Jonathan Stallard October 2012

2. The role of the charity trustee “Trustees have and must accept ultimate responsibility for directing the affairs of the charity, and ensuring it is solvent, well run, and delivering the charitable outcomes for the benefit of the public for which it has been set up.” From 'The Essential Trustee, what you need to know' - The Charity Commission

3. Obligations on the trustee relating to land and buildings • It depends! • Firstly, whose name is the property in? • This has an impact on the liability of both the charity and the trustee • Secondly, what you want to do. • This dictates the procedures that you must follow

4. In whose name is the property held? • It depends! • What type of charity it is: • Charitable company; or • Charitable trust; or • Unincorporated associations; or • Charitable incorporated organisation (not yet in existence)

5. Charitable company • Limited by guarantee • Property held in the charitable company’s name • Liability of trustees limited to the extent of the guarantee amount (usually £1.00)

6. Unincorporated association • Property held in the name of: • Some or all of the trustees; or • Vested in The Official Custodian for Charities. • Liability of the trustees of charity no different in either case • Liability not necessarily limited to the assets of the charity – be careful!

7. Types of property transactions • Acquiring • Disposing • Charging the property to a 3rd party

8. Acquiring property • Is your charity allowed to own or let property? • Check governing document • If yes, go ahead • If unsure, maybe rely on ‘the statutory power’ • If prohibited, apply to Charity Commission to amend governing document • Will it help the charity deliver the charitable outcomes?

9. Disposing of property • Generally an order from Charity Commission required unless: • Sale to independent 3rd party and the charity: • Takes professional advice from a surveyor to ensure that the charity is getting a fair deal • Advertises the proposed disposition in the way the surveyor advises • The disposal is one that is authorised to go ahead without having to comply with the statutory requirements • Transfer of property to another charity with similar objectives for less that the market value • Lease of property to a beneficiary of the charity, e.g. alms-houses

10. Charging the property to a 3rd party • Again, no mortgage can be entered into without an order from Charity Commission unless: • trustees take written advice from appropriately qualified person • the extent of the advice depends on the type of mortgage

11. What does the advice need to include? • To secure repayment of loan or grant • Necessary to pursue course of action • Terms of the loan are reasonable • Charity is able to repay the loan • To secure the discharge of any other obligation • Is it reasonable to undertake to discharge the obligation

12. Conclusions • Many different issues and dealings that a charity can have with property • As a trustee keep in mind: (a) the fact that everything you do should be done to ensure the charity “is solvent, well run, and delivering the charitable outcomes for the benefit of the public for which it has been set up”; and (b) their own potential liability

13. Contact • Jonathan Stallard01622 698047jonathanstallard@whitehead-monckton.co.uk