Benefits Of Vesting Charity Land In The Official Custodian

• Published date: 27 March 2023
• Subject Matter: orporate/Commercial Law, Charities & Non-Profits
• Law Firm: Herrington Carmichael
• Author: Mr Mark Chapman and Abhirami Babu

There are multiple ways for a charity to own a property, depending on how the charity is constituted, for example, by individuals acting as trustees or by the company if the charity is a company or a Charitable Incorporated Organisation (CIO). Where the land is held in the name of individual trustees, each time a trustee steps down, the Land Registry would need to be notified so that the register of title can be updated, which can be both administratively and financially burdensome for the charity.

The application to notify the Land Registry is also crucial so that the land is not vested in those trustees who are not associated with the charity any longer and result in poor management of the land. Moreover, if a trustee if being replaced upon the death of the previous trustee, the death of the previous trustee would need to be proved.

An Easier Approach - Vesting the land in the Official Custodian:

An unincorporated charity could adopt a simpler approach if it doesn't want to be responsible for applying to the Land Registry each time a trustee changes, and this is by vesting the land in the Official Custodian (OC). Through vesting the land in the OC, the charity can eliminate the need to update the Land Registry each time a trustee changes because the land would be vested in the OC regardless of who the trustees are. Another advantage is that the services of the OC are free. These advantages make this route a desirable and an effective one for unincorporated charities.

The land may be vested in the OC as a result of an order made by the court, or more commonly, by making an online application to the Charity Commission. The trustees would be required to have the registered number for the charity, details of the land to be vested and the evidence of the charity's ownership of the land. Subsequently, the OC would hold the legal title to the land on behalf of the charity and the beneficial ownership would remain with the charity.

Who manages the land after vesting in the OC?

Vesting the land in the OC does not remove the charity trustees from their responsibilities to manage the land. The trustees are still responsible for the upkeep, collection of rents and maintenance of the land, and ensuring that the land is being used for the purpose for which it's been held on trust. In addition, the...