The Charities Act 2011 (“ChA 2011”) contains provisions that charities are required to comply with before disposing of an interest in land. To simplify the process, the Charities Act 2022 (“ChA 2022”) makes changes to the ChA 2011 and received Royal Assent on 24 February 2022.
The aim of the ChA 2022 is to reduce unnecessary bureaucracy for charities in England and Wales and reforms the existing land disposal regime.
The provisions contained in the ChA 2022 which relate to land are yet to come into force. However, it is anticipated these will take effect from Spring 2023.
The current requirements to be met before agreements for most disposals are entered into are as follows, and are contained within s119 of the ChA 2011:
The requirements to be met before granting a lease of 7 years or less are as follows, and are contained within s120 of the ChA 2011:
Additional procedures are to be followed when land is held by the charity and is to be used for the purposes of the charity (i.e. the land is “designated land”) and are contained within s121 of the ChA 2011. This includes giving public notice of the proposed disposal, inviting representations to be made and taking into consideration any representations that are made within the requisite timeframe.
There are some transactions which are exempt from the above requirements, including:
In most cases, statements should also be included in the document effecting the disposition, confirming the above procedures have been followed or do not apply.
If the ChA 2011 requirements are not complied with, and the disposal was to a party that knew or should have known the statements contained in the disposal documents were incorrect, the disposal may be void or voidable. It is therefore important that the correct procedures have been followed, and the statements contained in the disposal documents are accurate.
There will no longer be a requirement to advertise the proposed disposition in a manner advised in the surveyor’s report (s19 ChA 2022).
The category of persons who can give advice will now include fellows of the National Association of Estate Agents and the Central Association of Agricultural Valuers. Reference to a “qualified surveyor” in s119 of the ChA 2011 will be substituted by “designated adviser” (s20 ChA 2022).
Qualified charity trustees, officers and employees will also be able to provide a report or advice on the proposed disposition (s21(2) ChA 2022).
The exceptions will not apply to dispositions of charity land by:
The exception for dispositions for which the consent of the Secretary of State is required under the Universities and Colleges Estates Act 1925 will be removed.
The exception for dispositions made to another charity otherwise than for the best price that can reasonably be obtained, and authorised by the trusts of the disposing charity, is to be amended so that this will not apply if the disposition is:
That exception will remove the requirement for the disposition to be authorised by the trusts of the charity.
Section 23 of the ChA 2022 also makes it clear that the relevant statements are to be included in contracts for dispositions of land and not just the documents effecting the dispositions themselves (i.e. transfers and leases).
If you require specific advice relating to the requirements of the Charities Acts on a disposal or acquisition of land or other related topics, please get in touch.