Land owned by charities is often held for very long periods of time. Naturally, over time there will be changes within the charity - new trustees will be appointed and others will leave, the charity may change its name or merge with another charity. A charity may be registered at the Charity Commission or it may become incorporated. All of these things may result in the Land Register needing to be updated.
As such, it is fairly common for a charity to find itself in a situation where it is looking to either sell, grant a lease or mortgage charity property, only to discover that the Land Registry titles are still registered in the name of a retired or deceased trustee, or are in some other way out-dated. An application may therefore be required to the Land Registry to update the title before the property transaction can progress which, given the current long delays in the Land Registry processing applications, is likely to lead to additional legal spend and long delays to the property transaction.
Who should be registered as the registered proprietor on the title?
How a charity’s property is registered at the Land Registry depends on how the charity is set up, and can be fairly complex, depending on the constitution of the charity in question.
Where the charity is a registered charitable company, things are pretty straightforward, as the company can hold the property in its own right and so the Land Registry will enter the name and address of the company in the register, together with the company registration number and registered charity number. If the charity is a charitable incorporated organisation (CIO), it can also hold the property itself and so the full name of the CIO will be entered, together with its registered charity number and its principal office address.
For un-incorporated charities, things are less clear cut. Some of the ways the property can be held are set out below:
- Charitable Trust - A charitable trust is not a legal entity in its own right and so cannot hold the property in its own name. The legal title to the property is usually held by the individual trustees on trust for the charity. The individuals who have been appointed as trustees will enter into the relevant deeds and be named on the title to the property, although the trustees can delegate authority to just two or more trustees. The Land Registry will enter the individual trustees as the registered proprietors, stating their name and address and an appropriate description such as “the trustees of the charity known as …”. It is necessary for at least 2 trustees to hold the legal title to the Property and there is usually a maximum of four.
Things can be complicated by the type of trustee that may be registered. Often, the managing trustees will be named as the registered proprietors of the property. However, in some circumstances the managing trustees nominate someone else, known as a ‘holding trustee’ to hold the property on the charities behalf.
- Charitable Unincorporated Association - A charitable unincorporated association is also not a separate legal entity and so cannot hold the property in its own right. Usually the property is vested in a separate set of trustees (such as some of its current or former members) or the official custodian for charities. Again, typically two or more of the individuals appointed as trustees of the charitable unincorporated association will be entered on the registered title to the property.
- Official Custodian for Charities - Where a property is vested in the Official Custodian for Charities, the name and address for service of the official custodian will be entered on the registered title. This means that the property title would not have to be updated each time there is a change of trustees and consequently should be considered for unincorporated charities.
It is important to note that the charity trustees of an unincorporated charity can apply to the Charity Commission for a certificate of incorporation of the trustees as a corporate body. Once the certificate is issued, the property belonging to the charity becomes vested in the name of the corporate body. This avoids the need to transfer titles to the property into the names of any new trustees and the need to update the title whenever a trustee retires/dies or a new trustee is appointed. It also enables the charity trustees to enter into contracts and deeds in the name of the corporate body, rather than in the names of the individual trustees. However, only the trustees and not the charity are incorporated and so this is not the same as (and does not offer the same protections and benefits of) re-structuring a charity as a charitable company or CIO (as above).
Why is it important to keep the Land Registry titles up to date?
Issues can easily arise when individual trustees retire or pass away but are still named as the registered proprietor on the title, or where the entity/ parties named as the registered proprietor at the Land Registry are out of date. Issues can also arise when there is a restriction shown on the registered title which requires the express consent of trustees. When the registered title is out of date, an application to the Land Registry will be required to amend the registered proprietor details, with the need to provide relevant supporting evidence such as the appointment or retirement of a trustee, death certificates etc. This can add significant delays and additional costs to a property transaction, especially if the charity is no longer in touch with the former trustee or if there has been any disagreement between them.
It is also important that the address shown in the register is kept up to date as this is used as the address for the service of any notices by the Land Registry. The trustees of a charity should, therefore, think carefully and provide the most appropriate address to the Land Registry, as this is where any notices will be received on behalf of the charity.
In conclusion, it is best practice to regularly check which names a property is registered in and the registered address details shown on the title, especially when a trustee retires or a new trustee is appointed. In addition, if a charity is considering any transaction involving property, one of the first steps should be to check the registered titles as it will be key to ensure these are up to date before proceeding.
Updating the titles can be complicated, especially in cases where a trustee has passed away. There is a wealth of information on the Land Registry website. We also regularly assist charity clients with this and if you have any questions at all please get in touch with one of our expert lawyers firstname.lastname@example.org.