Charities Bill [HL]

Session 2010 - 12
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Other Bills before Parliament

Charities Bill [HL]

Charities Bill [HL]
Part 7 — Charity land
61

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
rise to a forfeiture.
5
Part 7
Charity land
Restrictions on dispositions of land in England and Wales
117
Restrictions on dispositions of land: general
(1)
No land held by or in trust for a charity is to be conveyed, transferred, leased
10
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
(further provisions about restrictions on dispositions) and section 127 (release
15
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)
a trustee for, or nominee of, a connected person, and
20
(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)
The restrictions on disposition imposed by this section and sections 119 to 121
25
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
order of the court) by—
30
(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
of State is required under the Universities and College Estates Act 1925,
35
(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
charity, or
40
(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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Part 7 — Charity land
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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)
Nothing in this section or sections 119 to 121 applies to—
5
(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)
In section 117(2) “connected person”, in relation to a charity, means any person
10
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)
a charity trustee or trustee for the charity,
15
(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)
an officer, agent or employee of the charity,
20
(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)
an institution which is controlled—
25
(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)
has a substantial interest, or
30
(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
Requirements for dispositions other than certain leases
35
(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
a qualified surveyor instructed by the trustees and acting exclusively
40
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
disposition), and
45

Charities Bill [HL]
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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
of such a lease as is mentioned in section 120(1).
5
(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
Minister, and
10
(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
information, and deal with such matters, as may be prescribed by regulations
15
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
granted wholly or partly in consideration of a fine).
20
(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
and practical experience to provide them with competent advice on the
25
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
Additional restrictions where land held for stipulated purposes
30
(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)
The land must not be conveyed, transferred, leased or otherwise disposed of
35
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)
taken into consideration any representations made to them within that
40
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)
in any other case, the time of the disposition.
5
(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
in subsection (1)(b), or
10
(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)
that subsection (2) is not to apply to dispositions of land held by or in
15
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
by or in trust for a charity.
20
(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
Instruments concerning dispositions of land: required statements, etc.
25
(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
of such land.
30
(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)
if it is not an exempt charity and the disposition is not one falling within
35
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,
the charity trustees must certify in the instrument by which the disposition is
40
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
under the trusts of the charity to effect the disposition and have
45
complied with sections 117 to 121 so far as applicable to it.

Charities Bill [HL]
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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)
Subsection (6) applies where—
5
(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)
In favour of a person who (whether under the disposition or afterwards) in
10
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)
the charity trustees have power under the trusts of the charity to effect
15
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
will, as a result of the disposition, be held by or in trust for a charity,
20
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)
that the land will, as a result of the disposition, be held by or in trust for
25
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
117(3)).
30
(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)
any release of a rentcharge falling within section 127(1).
35
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)
a disposition which triggers the requirement of registration,
40

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)
a disposition of registered land, or
45
(b)
a person’s title under a disposition of unregistered land,

Charities Bill [HL]
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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)
Where—
5
(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)
On receiving any application duly made under subsection (3) the registrar
10
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)
any registered land becomes, as a result of a declaration of trust by the
15
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)
On receiving any application duly made under subsection (5) the registrar
20
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
is to be granted without an order of—
25
(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
advice, given to them in writing, on the relevant matters or matter mentioned
30
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
to be able to pursue the particular course of action in connection with
35
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)
the ability of the charity to repay on those terms the sum proposed to
40
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
purposes.
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Charities Bill [HL]
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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)
would also have effect to secure the repayment of sums paid by way of
5
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
by or in trust for a charity in accordance with subsection (2), and
10
(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
transaction involving—
15
(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
subsection (3)(a) to (c) or (4) (as the case may be).
20
(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
transaction in connection with which the advice is given;
25

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
nothing in this section applies to any mortgage—
30
(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)
Nothing in this section applies to an exempt charity.
35
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
one falling within section 124(9), and
40
(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
for a charity, the charity trustees must certify in the mortgage—
45