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Charities BillPage 60

(b) only with the agreement of the Attorney General on each occasion.

115 Proceedings by other persons

(1) Charity proceedings may be taken with reference to a charity by—

(a) the charity,

(b) 5any of the charity trustees,

(c) any person interested in the charity, or

(d) if it is a local charity, any two or more inhabitants of the area of the
charity,

but not by any other person.

(2) 10Subject to the following provisions of this section, no charity proceedings
relating to a charity are to be entertained or proceeded with in any court unless
the taking of the proceedings is authorised by order of the Commission.

(3) The Commission must not, without special reasons, authorise the taking of
charity proceedings where in its opinion the case can be dealt with by the
15Commission under the powers of this Act other than those conferred by section
114.

(4) This section does not require an order for the taking of proceedings—

(a) in a pending cause or matter, or

(b) for the bringing of any appeal.

(5) 20Where subsections (1) to (4) require the taking of charity proceedings to be
authorised by an order of the Commission, the proceedings may nevertheless
be entertained or proceeded with if, after the order had been applied for and
refused, leave to take the proceedings was obtained from one of the judges of
the High Court attached to the Chancery Division.

(6) 25Nothing in subsections (1) to (5) applies—

(a) to the taking of proceedings by the Attorney General, with or without
a relator, or

(b) to the taking of proceedings by the Commission in accordance with
section 114.

(7) 30If it appears to the Commission, on an application for an order under this
section or otherwise, that it is desirable—

(a) for legal proceedings to be taken with reference to any charity or its
property or affairs, and

(b) for the proceedings to be taken by the Attorney General,

35the Commission must so inform the Attorney General and send the Attorney
General such statements and particulars as the Commission thinks necessary
to explain the matter.

(8) In this section “charity proceedings” means proceedings in any court in
England or Wales brought under—

(a) 40the court’s jurisdiction with respect to charities, or

(b) the court’s jurisdiction with respect to trusts in relation to the
administration of a trust for charitable purposes.

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Supplementary

116 Effect of provisions relating to vesting or transfer of property

No vesting or transfer of any property in pursuance of any provision of this
Part operates as a breach of a covenant or condition against alienation or gives
5rise to a forfeiture.

Part 7 Charity land

Restrictions on dispositions of land in England and Wales

117 Restrictions on dispositions of land: general

(1) 10No land held by or in trust for a charity is to be conveyed, transferred, leased
or otherwise disposed of without an order of—

(a) the court, or

(b) the Commission.

But this is subject to the following provisions of this section, sections 119 to 121
15(further provisions about restrictions on dispositions) and section 127 (release
of charity rentcharges).

(2) Subsection (1) does not apply to a disposition of such land if—

(a) the disposition is made to a person who is not—

(i) a connected person (as defined in section 118), or

(ii) 20a trustee for, or nominee of, a connected person, and

(b) the requirements of—

(i) section 119(1) (dispositions other than certain leases), or

(ii) section 120(2) (leases which are for 7 years or less etc.),

have been complied with in relation to it.

(3) 25The restrictions on disposition imposed by this section and sections 119 to 121
apply regardless of anything in the trusts of a charity; but nothing in this
section or sections 119 to 121 applies to—

(a) any disposition for which general or special authority is expressly
given (without the authority being made subject to the sanction of an
30order of the court) by—

(i) any statutory provision contained in or having effect under an
Act, or

(ii) any scheme legally established,

(b) any disposition for which the authorisation or consent of the Secretary
35of State is required under the Universities and College Estates Act 1925,

(c) any disposition of land held by or in trust for a charity which—

(i) is made to another charity otherwise than for the best price that
can reasonably be obtained, and

(ii) is authorised to be so made by the trusts of the first-mentioned
40charity, or

(d) the granting, by or on behalf of a charity and in accordance with its
trusts, of a lease to any beneficiary under those trusts where the lease—

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(i) is granted otherwise than for the best rent that can reasonably
be obtained, and

(ii) is intended to enable the demised premises to be occupied for
the purposes, or any particular purposes, of the charity.

(4) 5Nothing in this section or sections 119 to 121 applies to—

(a) any disposition of land held by or in trust for an exempt charity,

(b) any disposition of land by way of mortgage or other security, or

(c) any disposition of an advowson.

118 Meaning of “connected person” in s.117(2)

(1) 10In section 117(2) “connected person”, in relation to a charity, means any person
who falls within subsection (2)—

(a) at the time of the disposition in question, or

(b) at the time of any contract for the disposition in question.

(2) The persons are—

(a) 15a charity trustee or trustee for the charity,

(b) a person who is the donor of any land to the charity (whether the gift
was made on or after the establishment of the charity),

(c) a child, parent, grandchild, grandparent, brother or sister of any such
trustee or donor,

(d) 20an officer, agent or employee of the charity,

(e) the spouse or civil partner of any person falling within any of
paragraphs (a) to (d),

(f) a person carrying on business in partnership with any person falling
within any of paragraphs (a) to (e),

(g) 25an institution which is controlled—

(i) by any person falling within any of paragraphs (a) to (f), or

(ii) by two or more such persons taken together, or

(h) a body corporate in which—

(i) any connected person falling within any of paragraphs (a) to (g)
30has a substantial interest, or

(ii) two or more such persons, taken together, have a substantial
interest.

(3) Sections 350 to 352 (meaning of child, spouse and civil partner, controlled
institution and substantial interest) apply for the purposes of subsection (2).

119 35Requirements for dispositions other than certain leases

(1) The requirements mentioned in section 117(2)(b) are that the charity trustees
must, before entering into an agreement for the sale, or (as the case may be) for
a lease or other disposition, of the land—

(a) obtain and consider a written report on the proposed disposition from
40a qualified surveyor instructed by the trustees and acting exclusively
for the charity,

(b) advertise the proposed disposition for such period and in such manner
as is advised in the surveyor’s report (unless it advises that it would not
be in the best interests of the charity to advertise the proposed
45disposition), and

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(c) decide that they are satisfied, having considered the surveyor’s report,
that the terms on which the disposition is proposed to be made are the
best that can reasonably be obtained for the charity.

(2) Subsection (1) does not apply where the proposed disposition is the granting
5of such a lease as is mentioned in section 120(1).

(3) For the purposes of subsection (1) a qualified surveyor is a person who—

(a) is a fellow or professional associate of the Royal Institution of
Chartered Surveyors or satisfies such other requirement or
requirements as may be prescribed by regulations made by the
10Minister, and

(b) is reasonably believed by the charity trustees to have ability in, and
experience of, the valuation of land of the particular kind, and in the
particular area, in question.

(4) Any report prepared for the purposes of subsection (1) must contain such
15information, and deal with such matters, as may be prescribed by regulations
made by the Minister.

120 Requirements for leases which are for 7 years or less etc.

(1) Subsection (2) applies where the proposed disposition is the granting of a lease
for a term ending not more than 7 years after it is granted (other than one
20granted wholly or partly in consideration of a fine).

(2) The requirements mentioned in section 117(2)(b) are that the charity trustees
must, before entering into an agreement for the lease—

(a) obtain and consider the advice on the proposed disposition of a person
who is reasonably believed by the trustees to have the requisite ability
25and practical experience to provide them with competent advice on the
proposed disposition, and

(b) decide that they are satisfied, having considered that person’s advice,
that the terms on which the disposition is proposed to be made are the
best that can reasonably be obtained for the charity.

121 30Additional restrictions where land held for stipulated purposes

(1) Subsection (2) applies where—

(a) any land is held by or in trust for a charity, and

(b) the trusts on which it is so held stipulate that it is to be used for the
purposes, or any particular purposes, of the charity.

(2) 35The land must not be conveyed, transferred, leased or otherwise disposed of
unless the charity trustees have before the relevant time—

(a) given public notice of the proposed disposition, inviting
representations to be made to them within a time specified in the notice,
which must be not less than one month from the date of the notice, and

(b) 40taken into consideration any representations made to them within that
time about the proposed disposition.

(3) Subsection (2)—

(a) is subject to subsections (5) and (6), and

(b) does not affect the operation of sections 117 to 120.

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(4) In subsection (2) “the relevant time” means—

(a) where the charity trustees enter into an agreement for the sale, or (as the
case may be) for the lease or other disposition, the time when they enter
into that agreement, and

(b) 5in any other case, the time of the disposition.

(5) Subsection (2) does not apply to any such disposition of land as is there
mentioned if—

(a) the disposition is to be effected with a view to acquiring by way of
replacement other property which is to be held on the trusts referred to
10in subsection (1)(b), or

(b) the disposition is the granting of a lease for a term ending not more than
2 years after it is granted (other than one granted wholly or partly in
consideration of a fine).

(6) The Commission may, if the condition in subsection (7) is met, direct—

(a) 15that subsection (2) is not to apply to dispositions of land held by or in
trust for a charity or class of charities (whether generally or only in the
case of a specified class of dispositions or land, or otherwise as may be
provided in the direction), or

(b) that subsection (2) is not to apply to a particular disposition of land held
20by or in trust for a charity.

(7) The condition is that the Commission, on an application made to it in writing
by or behalf of the charity or charities in question, is satisfied that it would be
in the interests of the charity or charities for the Commission to give the
direction.

122 25Instruments concerning dispositions of land: required statements, etc.

(1) Subsection (2) applies to any of the following instruments—

(a) a contract for the sale, or for a lease or other disposition, of land which
is held by or in trust for a charity, and

(b) a conveyance, transfer, lease or other instrument effecting a disposition
30of such land.

(2) An instrument to which this subsection applies must state—

(a) that the land is held by or in trust for a charity,

(b) whether the charity is an exempt charity and whether the disposition is
one falling within section 117(3)(a), (b), (c) or (d), and

(c) 35if it is not an exempt charity and the disposition is not one falling within
section 117(3)(a), (b), (c) or (d), that the land is land to which the
restrictions on disposition imposed by sections 117 to 121 apply.

(3) Where any land held by or in trust for a charity is conveyed, transferred, leased
or otherwise disposed of by a disposition to which section 117(1) or (2) applies,
40the charity trustees must certify in the instrument by which the disposition is
effected—

(a) (where section 117(1) applies) that the disposition has been sanctioned
by an order of the court or of the Commission (as the case may be), or

(b) (where section 117(2) applies) that the charity trustees have power
45under the trusts of the charity to effect the disposition and have
complied with sections 117 to 121 so far as applicable to it.

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(4) Where subsection (3) has been complied with in relation to any disposition of
land, then in favour of a person who (whether under the disposition or
afterwards) acquires an interest in the land for money or money’s worth, it is
conclusively presumed that the facts were as stated in the certificate.

(5) 5Subsection (6) applies where—

(a) any land held by or in trust for a charity is conveyed, transferred, leased
or otherwise disposed of by a disposition to which section 117(1) or (2)
applies, but

(b) subsection (3) has not been complied with in relation to the disposition.

(6) 10In favour of a person who (whether under the disposition or afterwards) in
good faith acquires an interest in the land for money or money’s worth, the
disposition is valid whether or not—

(a) the disposition has been sanctioned by an order of the court or of the
Commission, or

(b) 15the charity trustees have power under the trusts of the charity to effect
the disposition and have complied with sections 117 to 121 so far as
applicable to it.

(7) Subsection (8) applies to any of the following instruments—

(a) a contract for the sale, or for a lease or other disposition, of land which
20will, as a result of the disposition, be held by or in trust for a charity,
and

(b) a conveyance, transfer, lease or other instrument effecting a disposition
of such land.

(8) An instrument to which this subsection applies must state—

(a) 25that the land will, as a result of the disposition, be held by or in trust for
a charity,

(b) whether the charity is an exempt charity, and

(c) if it is not an exempt charity, that the restrictions on disposition
imposed by sections 117 to 121 will apply to the land (subject to section
30117(3)).

(9) In this section and section 123 references to a disposition of land do not include
references to—

(a) a disposition of land by way of mortgage or other security,

(b) any disposition of an advowson, or

(c) 35any release of a rentcharge falling within section 127(1).

123 Charity land and land registration

(1) Where the disposition to be effected by any such instrument as is mentioned in
section 122(1)(b) or (7)(b) will be—

(a) a registrable disposition, or

(b) 40a disposition which triggers the requirement of registration,

the statement which, by virtue of section 122(2) or (8), is to be contained in the
instrument must be in such form as may be prescribed by land registration
rules.

(2) Where the registrar approves an application for registration of—

(a) 45a disposition of registered land, or

(b) a person’s title under a disposition of unregistered land,

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and the instrument effecting the disposition contains a statement complying
with section 122(8) and subsection (1), the registrar must enter in the register a
restriction reflecting the limitation under sections 117 to 121 on subsequent
disposal.

(3) 5Where—

(a) any such restriction is entered in the register in respect of any land, and

(b) the charity by or in trust for which the land is held becomes an exempt
charity,

the charity trustees must apply to the registrar for the removal of the entry.

(4) 10On receiving any application duly made under subsection (3) the registrar
must remove the entry.

(5) Where—

(a) any registered land is held by or in trust for an exempt charity and the
charity ceases to be an exempt charity, or

(b) 15any registered land becomes, as a result of a declaration of trust by the
registered proprietor, land held in trust for a charity (other than an
exempt charity),

the charity trustees must apply to the registrar for such a restriction as is
mentioned in subsection (2) to be entered in the register in respect of the land.

(6) 20On receiving any application duly made under subsection (5) the registrar
must enter such a restriction in the register in respect of the land.

Restrictions on mortgages of land in England and Wales

124 Restrictions on mortgages

(1) Subject to subsection (2), no mortgage of land held by or in trust for a charity
25is to be granted without an order of—

(a) the court, or

(b) the Commission.

(2) Subsection (1) does not apply to a mortgage of any such land if the charity
trustees have, before executing the mortgage, obtained and considered proper
30advice, given to them in writing, on the relevant matters or matter mentioned
in subsection (3) or (4) (as the case may be).

(3) In the case of a mortgage to secure the repayment of a proposed loan or grant,
the relevant matters are—

(a) whether the loan or grant is necessary in order for the charity trustees
35to be able to pursue the particular course of action in connection with
which they are seeking the loan or grant,

(b) whether the terms of the loan or grant are reasonable having regard to
the status of the charity as the prospective recipient of the loan or grant,
and

(c) 40the ability of the charity to repay on those terms the sum proposed to
be paid by way of loan or grant.

(4) In the case of a mortgage to secure the discharge of any other proposed
obligation, the relevant matter is whether it is reasonable for the charity
trustees to undertake to discharge the obligation, having regard to the charity’s
45purposes.

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(5) Subsection (3) or (as the case may be) subsection (4) applies in relation to such
a mortgage as is mentioned in that subsection whether the mortgage—

(a) would only have effect to secure the repayment of the proposed loan or
grant or the discharge of the proposed obligation, or

(b) 5would also have effect to secure the repayment of sums paid by way of
loan or grant, or the discharge of other obligations undertaken, after the
date of its execution.

(6) Subsection (7) applies where—

(a) the charity trustees of a charity have executed a mortgage of land held
10by or in trust for a charity in accordance with subsection (2), and

(b) the mortgage has effect to secure the repayment of sums paid by way
of loan or grant, or the discharge of other obligations undertaken, after
the date of its execution.

(7) In such a case, the charity trustees must not after that date enter into any
15transaction involving—

(a) the payment of any such sums, or

(b) the undertaking of any such obligations,

unless they have, before entering into the transaction, obtained and considered
proper advice, given to them in writing, on the matters or matter mentioned in
20subsection (3)(a) to (c) or (4) (as the case may be).

(8) For the purposes of this section proper advice is the advice of a person—

(a) who is reasonably believed by the charity trustees to be qualified by
ability in and practical experience of financial matters, and

(b) who has no financial interest in relation to the loan, grant or other
25transaction in connection with which the advice is given;

and such advice may constitute proper advice for those purposes even though
the person giving it does so in the course of employment as an officer or
employee of the charity or of the charity trustees.

(9) This section applies regardless of anything in the trusts of a charity; but
30nothing in this section applies to any mortgage—

(a) for which general or special authority is given as mentioned in section
117(3)(a), or

(b) for which the authorisation or consent of the Secretary of State is
required as mentioned in section 117(3)(b).

(10) 35Nothing in this section applies to an exempt charity.

125 Mortgages: required statements, etc.

(1) Any mortgage of land held by or in trust for a charity must state—

(a) that the land is held by or in trust for a charity,

(b) whether the charity is an exempt charity and whether the mortgage is
40one falling within section 124(9), and

(c) if it is not an exempt charity and the mortgage is not one falling within
section 124(9), that the mortgage is one to which the restrictions
imposed by section 124 apply.

(2) Where section 124(1) or (2) applies to any mortgage of land held by or in trust
45for a charity, the charity trustees must certify in the mortgage—

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(a) (where section 124(1) applies) that the mortgage has been sanctioned by
an order of the court or of the Commission (as the case may be), or

(b) (where section 124(2) applies) that the charity trustees have power
under the trusts of the charity to grant the mortgage, and have obtained
5and considered such advice as is mentioned in section 124(2).

(3) Where subsection (2) has been complied with in relation to any mortgage, then
in favour of a person who (whether under the mortgage or afterwards)
acquires an interest in the land in question for money or money’s worth, it is
conclusively presumed that the facts were as stated in the certificate.

(4) 10Subsection (5) applies where—

(a) section 124(1) or (2) applies to any mortgage of land held by or in trust
for a charity, but

(b) subsection (2) has not been complied with in relation to the mortgage.

(5) In favour of a person who (whether under the mortgage or afterwards) in good
15faith acquires an interest in the land for money or money’s worth, the
mortgage is valid whether or not—

(a) the mortgage has been sanctioned by an order of the court or of the
Commission, or

(b) the charity trustees have power under the trusts of the charity to grant
20the mortgage and have obtained and considered such advice as is
mentioned in section 124(2).

(6) Where section 124(7) applies to any mortgage of land held by or in trust for a
charity, the charity trustees must certify in relation to any transaction falling
within section 124(7) that they have obtained and considered such advice as is
25mentioned in section 124(7).

(7) Where subsection (6) has been complied with in relation to any transaction,
then, in favour of a person who (whether under the mortgage or afterwards)
has acquired or acquires an interest in the land for money or money’s worth, it
is conclusively presumed that the facts were as stated in the certificate.

126 30Mortgages of charity land and land registration

(1) Where the mortgage referred to in section 125(1) will be a registrable
disposition, the statement required by section 125(1) must be in such form as
may be prescribed by land registration rules.

(2) Where any such mortgage will be one to which section 4(1)(g) of the Land
35Registration Act 2002 applies—

(a) the statement required by section 125(1) must be in such form as may
be prescribed by land registration rules, and

(b) if the charity is not an exempt charity, the mortgage must also contain
a statement, in such form as may be prescribed by land registration
40rules, that the restrictions on disposition imposed by sections 117 to 121
apply to the land (subject to section 117(3)).

(3) Where—

(a) the registrar approves an application for registration of a person’s title
to land in connection with such a mortgage as is mentioned in
45subsection (2),

(b) the mortgage contains statements complying with section 125(1) and
subsection (2), and

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(c) the charity is not an exempt charity,

the registrar must enter in the register a restriction reflecting the limitation
under sections 117 to 121 on subsequent disposal.

(4) Subsections (3) and (4) of section 123 (removal of entry) apply in relation to any
5restriction entered under subsection (3) as they apply in relation to any
restriction entered under section 123(2).

Release of charity rentcharges

127 Release of charity rentcharges

(1) Section 117(1) does not apply to the release by a charity of a rentcharge which
10it is entitled to receive if the release is given in consideration of the payment of
an amount which is not less than 10 times the annual amount of the rentcharge.

(2) Where a charity which is entitled to receive a rentcharge releases it in
consideration of the payment of an amount not exceeding £1,000, any costs
incurred by the charity in connection with proving its title to the rentcharge are
15recoverable by the charity from the person or persons in whose favour the
rentcharge is being released.

(3) Neither section 117(1) nor subsection (2) of this section applies where a
rentcharge which a charity is entitled to receive is redeemed under sections 8
to 10 of the Rentcharges Act 1977.

128 20Power to alter sum specified in s.127(2)

The Minister may by order amend section 127(2) by substituting a different
sum for the sum for the time being specified there.

Interpretation

129 Interpretation

(1) 25In sections 117 to 126 “land” means land in England and Wales.

(2) In sections 124 to 126 “mortgage” includes a charge.

(3) Sections 123 and 126 are to be construed as one with the Land Registration Act
2002.

Part 8 30Charity accounts, reports and returns

CHAPTER 1 Individual accounts

130 Accounting records

(1) The charity trustees of a charity must ensure that accounting records are kept
in respect of the charity which are sufficient to show and explain all the
35charity’s transactions, and which are such as to—

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