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Land ownership for unincorporated charities: what’s the best option?
There are a few different ways in which a charity can own land. Often the simplest solution for charities that are not companies or Charitable Incorporated Organisations is for it to be held by the Official Custodian.
The Official Custodian is an entity created by the Charities Act 2011 whose main function is to hold land belonging to a charity on trust for the charity.
Benefits of vesting land in the Official Custodian
Unincorporated charities do not have their own legal identity and therefore cannot hold land in their own name. Instead, an unincorporated charity’s land must be held by nominated individuals (usually either holding trustees or charity trustees) on trust for the charity.
The main advantage of vesting land in the Official Custodian is that it avoids the administrative burdens of changing ownership of land that is held on trust for a charity each time a trustee is replaced, retired or appointed, allowing charity trustees to spend their valuable time furthering the charity’s objectives.
There is also likely to be a net cost saving for charities that do vest their land as they will not incur recurring fees and costs applying to the Land Registry to change ownership of charity land every time there is a change in trusteeship.
What are the Official Custodian’s responsibilities?
The responsibility for managing charity land vested in the Official Custodian remains entirely with the charity trustees. The Official Custodian cannot exercise any powers of management – its sole purpose is to hold the land on trust for the charity.
For example, the Official Custodian has no power to enter into lease agreements or pay taxes in respect of the vested land. Charity trustees keep all the powers and duties of management such as deciding how the land should be used, collecting rents and arranging repair and maintenance.
Land must be held by or on behalf of the charity before it can be vested in the Official Custodian, which is done by completing an online application form to the Charity Commission.
Once the Commission has issued an order vesting land in the Official Custodian, a Land Registry application will need to be submitted to change the legal ownership of the property from the charity trustees to the Official Custodian.
What can we do to help?
Our Real Estate lawyers have extensive experience advising on transactions involving land held by charities and trustees. If you are a charity trustee and are interested in vesting land in the Official Custodian, please contact Ryan Cotton on 01274 848 837 or by email to ku.oc1708862152.fcl@1708862152notto1708862152cr1708862152 for further information.