When Do Charity Trustees Have Power To Dispose Of Charity Land?

• Published date: 02 July 2020
• Subject Matter: Corporate/Commercial Law, Charities & Non-Profits , Corporate and Company Law, Trusts
• Law Firm: Rollits LLP
• Author: Ms Gerry Morrison

It is useful for trustees of land holding charities to be aware of when they have power to dispose of the charity's land. Unexpected complications and delays can arise if specific issues have not been considered in advance of the completion date.

The charity's trustees must consider:

• Whether they have power to dispose of the land taking into account the provisions in the charity's governing document and their statutory powers;
• The Charities Act 2011 which requires charity trustees to follow specific procedures before disposing of charity land, and which differ depending upon the type of disposal and
• Whether the land is subject to any special trusts or is permanent endowment.

Type of charity

The trustees' power to dispose of charity land will depend upon the type of charity and the structure through which it operates.

Charitable companies should check their Articles of Association to ascertain the extent of the trustees' powers to dispose of the charity's land. It is common for express powers of disposal to be included in up to date Articles.

Charitable trusts or unincorporated associations may also include similar provisions in a well-drafted and up to date trust deed or constitution. In circumstances where an express power is absent, then trustees may use a statutory power pursuant to the Trusts of Land and Appointment of Trustees Act 1996 which confers on trustees of land all the powers of an absolute owner including of disposal.

Charities incorporated organisations (CIOs) which use a Charity Commission's Model Constitution should also have clear powers of disposal.

If in any doubt, charity trustees should seek advice on the interpretation of these provisions particularly if they are subject to any caveats or restrictions and to ascertain whether the land itself is subject to any special trusts or is permanent endowment.

Permanent Endowment

Land that is permanent endowment cannot generally be disposed of without The Charity Commission's prior written consent. The statutory regime differs depending upon the circumstances and the size and structure of the charity.

Professional advice should be obtained at an early stage if charity trustees are considering disposing of permanent endowment -

Obtaining consent can be a lengthy process and can delay transactions if the correct procedures are not followed.

Designated Land

"Designated land" describes charity land that is required by the trusts upon which it is held to be used for the charity's purposes. An...