Becky Everitt and Helen Mutucumarana offer a reminder of key factors that trustees must bear in mind

Unlike other owners of land charities have to comply with strict statutory requirements when dealing with property transactions. Charitable organisations are not always aware of the requirements. This can lead to increased costs in transactions.

Charity trustees must be satisfied that any property deal is:

  • properly managed;
  • in the charity’s best interests; and
  • at the best price possible.

One key requirement, which is often overlooked, is that when disposing of land a charity must obtain and consider a qualified surveyor’s written report on the proposed disposal.

Disposal

A disposal of property is any of the following:

  • sale of property;
  • the grant of a lease for more than 7 years;
  • the grant of an easement or right over the land; and
  • the grant of a wayleave.

It does not include:

  • the grant of a lease for less than 7 years;
  • the sale of land or the grant of a lease to another charity for less than market value;
  • the grant of a licence to occupy; or
  • the sharing of occupation of the property (where no landlord or tenant relationship is created).

Qualified Surveyor

The person instructed to prepare the report must be a qualified surveyor who:

  • is a fellow or professional associate of the Royal Institute of Chartered Surveyors; and
  • has the ability in, and experience of valuing land that is of the same kind and in the same area as the land being disposed of.

The Law Commission’s recently published recommendations have suggested broadening the list of acceptable designated advisors. This would provide greater flexibility to charities and more tailored advice for the transaction in question. For the moment, however, charities will still need to continue to instruct chartered surveyors where a disposal of property is proposed.

Nature of the Report

Frequently there is confusion as to what a surveyor’s report should include. In addition to the particulars of the property, the report must contain the surveyor’s opinion on the value of the land (and/ or the rent to be paid) having regard to the nature of the transaction and land in question, and the method for marketing the property.

Often the most valuable aspect of the report is the surveyor’s opinion on whether the proposed transaction is in the best interests of the charity, and charities should press for this if it is not included. If the surveyor believes that the disposition is not in the best interests of the charity because, for example, it does not make the best use of the land, the surveyor must state that opinion, the reasons for it and advise on alternative ways of disposing of the land. This prevents the surveyor’s report from becoming a simple tick-box exercise and provides a practical steer for trustees on securing the best outcome for the charity.

Action by trustees on the basis of the report

On receipt of the report, the charity must advertise the proposed disposition for such period and in such manner as the surveyor has advised in their report. An updated surveyor’s report will then be required to take account of any final and acceptable offers on the property. With this revised report in mind, the trustees must be satisfied and resolve that the terms on which the disposition is proposed are the best that can reasonably be obtained for the charity. As such, the surveyor’s report is crucial in providing clear advice for trustees on the merits of the transaction and the basis on which it should be conducted.

As a result, a surveyor should be brought on board as early as possible to ensure that any recommendations can be acted upon and the trustees can be assured that the property is marketed in a legally-compliant and appropriate way.