Acquiring Commercial Property As A Charity

As with any business, a charity may at some point wish to buy or lease commercial property.

There are many reasons that a charity may wish to own or lease premises, including:

  1. Investment – properties are still one of the most reliable investment options for any business due to their relatively stable growth;
  2. Retail – many charities use retail properties to sell gifted stock in order to raise money for their charities;
  3. Business administration – charities, like any other business, need premises to operate from; and
  4. Complementary functions – charities may wish to buy or lease properties in order to meet their mission statements. For example a sporting charity may wish to take a lease of sporting facilities, a food bank may wish to lease a kitchen.

While a large proportion of property transactions will always remain the same, irrespective of who the client is, charities will need to consider the following key questions:

  1. Do the trustees of a charity have the power to take a lease?
  2. Do the trustees of a charity need to seek professional advice when buying or selling land or property?
  3. Are the trustees of a charity personally liable when buying land or property?

1. Do the trustees of a charity have the power to own property?

The short answer is yes. Any charity can own property, however, many charities may wish to limit their own ability to do so. A charity’s governing document will state whether specific consent will be required in order to buy property.

Ordinarily consent is not required, however, there are situations where charities do need to seek consent from the Charity Commission or the Court and as your solicitor, we would consider this for you.

2. Do the trustees of a charity need to seek professional advice when buying or selling land or property?

There is currently no obligation on charity trustees to take advise when purchasing or leasing land as opposed to when selling land.

However, the trustees will be under an obligation to act reasonably and in the best interests of the charity which means that if they do decide to buy or lease the land then they need to ensure that they understand the implications of the purchase and take both legal and financial advice.

3. Are the trustees of a charity personally liable when buying land or property?

When entering into legal documentation trustees can expose themselves to liability for all of the covenants that they agree to under the lease. In order to protect the trustees your solicitor will try to limit your personal liability under the lease.

As your solicitor we will also assist with the registration of your transaction and we will arrange to pay your stamp duty land tax on completion, along with applying any relevant tax reliefs.

charity buying property

How can Nelsons help?

Nathan Wescott is an Associate in our expert Charity team, specialising in commercial property work.

For further information on the subjects discussed in this article, please contact Nathan or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.

 

Statement concerning Coronavirus. Read more
close
Statement concerning Coronavirus. Read more
close