Charity property, permanent endowment and construction
A charity may be the beneficial owner of its land and other property but sometimes its trustees are required to hold the property on special trusts that protect it from certain claims of third parties.
In either case the charity trustees are under a duty to safeguard the property of the charity and apply it only for the purposes of the charity.
Land
Charity land can give rise to complex questions, especially if it has been classified as permanent endowment. In some cases an expediency order can be obtained, subject to recoupment, under s.26 of the Charities Act 1993. An order of this kind may permit the trustees to use the property for a purpose that would not otherwise be within the powers exercisable by the charity trustees.
Before disposing of land belonging to a charity, the charity trustees must comply with sections 36 & 37 of the Act. And they must also comply with sections 38 & 39 before they mortgage or charge land that remains in the charity.
Schools and colleges with land that is unregistered may be well advised to apply for voluntary first registration, especially if they are considering undertaking any land transaction or corporate project.
Chattels
Land apart, some charities hold valuable collections of chattels such as paintings, plates, sculptures, books and scrolls, relics and other treasures that must be safeguarded and insured. The trustees are required to identify and minimise the risks that arise from custodianship of such property, and in particular to minimise the risk of loss by theft, fraud, damage or deterioration.
Legacies
Schools sometimes benefit from a life time gift or legacy given for a purpose that can no longer be carried out, or a purpose that would not provide a suitable and effective method of using the property. Then, the charity trustees are required to apply to the Charity Commission for a cy-prés scheme that will authorise a different use of the money or property provided the original spirit of the gift is adequately reflected.
In all these and many other cases involving charity property, the trustees are justified in seeking specialist legal advice at the expense of the charity to ensure that a case can be put to the Commission with a solid factual, evidential and legal basis.
Our Charities team has many years of specialist experience advising independent schools, colleges and universities on questions relating to charity property. Please contact us for an informal discussion, without obligation.
