Senior associate solicitor Gemma Smith, in our Commercial Property team, explains the ways in which charity property can be held.
Traditionally, the legal title to charity property was held by a number (usually between 2 and 4) of individual Trustees of that charity. When these Trustees changed, it was necessary either to transfer the charity property to the new Trustees and to register that transfer at the Land Registry or to register a deed of retirement and appointment of Trustees effecting a transfer of the property at the Land Registry.
However, in our experience this is often not dealt with correctly resulting in charity property remaining in the name of former or even deceased Trustees. This causes difficulties and delays in transactions, which is often the only time that titles and ownership are reviewed. We would urge all charities where property is held by individual Trustees to check that everything is up to date and to act now where it is not. By dealing with it as soon as possible, it will prevent unnecessary delays to any transactions. Where former Trustees are dead, it can be very time consuming to track down death certificates and it may even be necessary to ask the Charity Commission to vest the property in new Trustees where none of the property-owning Trustees are alive or traceable.
There are now a number of ways in which charity property can be held to avoid having to transfer the property every time there is a change in the property holding Trustees. These are as follows:
1) To incorporate as a Charitable Incorporated Organisation (CIO). This, like a company is a legal entity and can therefore hold property in its name at the Land Registry. The documents will then need to be signed by two current Trustees on behalf of the CIO.
2) To incorporate as a company. Like with a CIO, the company is a legal entity and can therefore hold property in its name. The downside for some charities of this option is that the Companies Act requirements will need to be complied with, which can be rather onerous unless there are other reasons for incorporating as a company.
3) To apply for the charity property to be held by the Official Custodian (OC) on behalf of the charity. This is a good option where neither of the above options are desirable, particularly for small charities. The OC would be the legal owner at the Land Registry which would negate the requirement for property ownership to change each time there is a change of Trustees, but the structure of the charity itself would not need to be altered.
The above all involve an element of work at the outset to transfer the charity property into the name of the relevant legal entity, and potentially also to set up that legal entity. However, once that is dealt with, the charity property can then remain within that legal entity until such a time as the charity wishes to dispose of it.
Blandy & Blandy is able to advise and assist on all elements of the above, including transfers of charity property and setting up a CIO or a company. Please get in touch with us if we might be able to assist.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
