Cookies Policy

We use cookies on this website to enable you to get the best experience. If you continue without changing your settings, we'll assume that you are happy to receive cookies. To find out more about what we use cookies for, or to find out how to change your settings, please read our Cookie Policy.

The legal side

Reviewed by Peter Tobin March 2015

Your solicitor will need to carry out a range of tasks during the purchase of a property. This section sets out the main areas of legal work involved and the reasons for doing them. They cover:

Follow this link for more advice on finding and using solicitors.

The Charities Act 2011

Before entering into the purchase, the trustees must make sure that the charity has the power to acquire land, either freehold or leasehold. There is no requirement for charity trustees to follow a statutory procedure when acquiring land but they should take advice and obtain a surveyor's report to ensure they are getting value for money, the property is in a suitable state of repair and the acquisition is in the best interests of the charity. This procedure differs from when the Charity disposes of an interest (exceeding 3 years) when under Charities (Qualified Surveyors Reports) Regulations 1992, a report in the statutory form is required.

The trustees should also be able to satisfy themselves that the price at which the land is being purchased is reasonable and the property will be suitable for the purposes for which it is being purchased. If the trustees are purchasing a property for investment purposes, they will need to think about the potential income that could be obtained from rental and its potential future selling price.

If the legal entity buying a property (or, indeed, selling an existing property) is a charity, then you will need to ensure that you are complying with the relevant sections of the Charities Act 2011. Where trustees rely on funding it's best to speak to potential lenders before engaging far in negotiations, for instance some grant-making bodies will only offer assistance if the property is freehold or a lease of a least 25 years, and this might be crucial to the exercise.

Section 117

If you are a charity and are selling an existing property to fund the new purchase, then Section 117 of the Charities Act 2011 will need to be complied with. Section 117 requires a charity in this situation to take advice from a qualified surveyor to ensure that it achieves the best terms that can reasonably be obtained. 

Please note: The detailed provisions of Section 117 are beyond the scope of our Service. Specialist professional advice should always be sought from a chartered surveyor. The Charity Commission is helpful with advice if there is an issue as to whether or not trustees can satisy the Regulations, (e.g. if selling to another charity at a price less than the surveyor will certify).

Section 124

If your charity is financing the purchase with either a loan or a grant, then the funder will almost invariably want a legal charge (ie a mortgage) over the property. Section 124 of the Charities Act will need to be complied with in respect of this charge.

To comply with Section 124, your trustees/directors should take advice from a suitably qualified person on the following points:

  • whether the loan/grant is necessary for the charity to perform its objects
  • whether the terms of the loan/grant are reasonable
  • whether the loan/grant can be repaid if circumstances demand it

The advice must come from someone the trustees/directors reasonably believe to be qualified to give it, by virtue of that individual's knowledge and experience of business and financial matters.

An employee of the charity can give the Section 124 advice if the grant or loan is small. However, for a larger loan it is more appropriate for a professional financial advisor from outside the Charity to be paid to provide a professional opinion. This is largely because if the advice proves to be defective and loss is suffered by the charity as a result, then the professional advisor's Professional Indemnity Insurance should cover some or all of that loss.

Detailed guidance on all of these issues can be found on the website of the Charity Commissioners and further information is available on this website in the sections Disposal of Property and Good Practice.

Places of Worship (Enfranchisement) Act 1920

This rather obscure provision allows places of pubic worship to compulsorily require the landlord to sell them the freehold if (principally) the building is let to the religious organisation for 21 years.  The basis of compensation is the same as if the landlord’s interest was being acquired by a statutory body having compulsory purchase powers.  Although rarely used religious communities should know of is existence and take advantage of the legislation if appropriate.

Back to top