Guidance

The Official Custodian for Charities' 'land holding' service

Published 1 September 2004

Applies to England and Wales

1. What is this guidance about?

This guidance briefly describes the services of the Official Custodian for Charities in respect of charity land.

2. Who is the Official Custodian?

The Official Custodian is a corporation created by statute to hold land on behalf of charities; in practice he/she is a member of the Charity Commission’s staff who is appointed to this role. If land is to be held by the Official Custodian it has to be ‘vested’ in him/her.

3. Meaning of words used in this guidance

‘The Charities Act’ means the Charities Act 2011.

‘Land’ means land in England or Wales with or without buildings, and includes any estate or interest in land, such as a lease, a right of way, an easement, or a rent charge. In this context it specifically does not include an interest in land by way of mortgage or other security.

‘Trustees’ means ‘charity trustees’. The charity trustees are the people responsible under the governing document for controlling the charity’s management and administration. In the governing document they may be called committee members, governors, directors, or some other title. Sometimes a charity also has custodian or holding trustees, whose function is restricted to holding its property. Custodian or holding trustees have no power to make management decisions and must act on the lawful instruction of the ‘charity trustees’.

The word ‘must’ is used where there is a specific legal or regulatory requirement that you must comply with. ‘Should’ is used for minimum good practice guidance you should follow unless there’s a good reason not to.

4. Before land can be vested in the Official Custodian

The title to the land must already be held by the charity before it can be vested in the Official Custodian. Even where the two actions of acquiring land and subsequent vesting of that land in the Official Custodian are being taken as part of a single process, they should be performed by two separate legal documents. The Official Custodian must not be a named party in any conveyance, transfer, lease or other deed acquiring land.

5. How land is vested in the Official Custodian

Land may be vested in the Official Custodian by an order made by the court or, more usually, by the commission, using the provisions contained in the Charities Act. You can make an application to vest charity land in the Official Custodian through the online form. You will receive a copy of the order.

Charity land which was, before 1 January 1961, vested in the Official Trustee for Charity Lands vested automatically on that date in the Official Custodian.

6. Registration of land

Once the commission has vested the land in the Official Custodian, the charity’s trustees can then apply to the Land Registry to have their title registered in the name of the Official Custodian. If the land is unregistered, then the commission would encourage trustees to consider the benefits of registering the land before vesting, such as ensuring proof of title - please contact the Land Registry for details (see the website https://www.gov.uk/government/organisations/land-registry or check the phone directory under ‘Land Registry’ for your local office).

7. Advantages of vesting land in the Official Custodian

Charities which are unincorporated, such as trusts or associations, do not have legal identity and cannot hold property (including land) in their own name. Instead it must be held on behalf of the charity by nominated individuals (known as holding trustees, and often in practice one or more of the charity trustees) or a corporate body. In the case of individuals, from time to time these individuals will change (eg due to retirement or death), and new deeds will be required to transfer the property to their successor. However, vesting charity land in the Official Custodian removes this need. This has two advantages:

• the charity is saved the expense of making the new deeds required when its holding trustees change

• there is no risk that the charity land will remain vested in people who are no longer involved with the charity and who may be difficult to trace

If the charity is a company or other corporate body it has its own legal identity and can hold property (including land) in its own name. There is therefore no need to vest the land in the Official Custodian, as this does not bring with it any added advantages. The same applies to unincorporated charities under the trusteeship of a corporate body (for example where the trustees have incorporated themselves under the Charities Act). In this case the corporate trustee can hold the land on behalf of the charity, irrespective of any turnover in the individuals making up the trustee body.

If charity land is vested in people who are no longer connected with the charity and particularly if all the people in whom the land was last vested are dead or untraceable, an order of the commission vesting the land in the Official Custodian may be the best way of making sure that the charity can show that it owns the land.

Vesting in the Official Custodian simplifies the ownership of the charity land and may make dealing with the land (such as selling or leasing it) less troublesome and expensive. For example, in the case of unregistered land the number of deeds to be produced will be reduced and there will be no need to prove the deaths of previous trustees.

In addition, the services of the Official Custodian are free.

8. Managing the land

The Official Custodian cannot take part in managing land vested in him/her. The charity trustees keep all the powers and duties of management. They will still, for example, have to:

• decide how the land should be let (if the governing document of the charity states that the land may or must be let)

• arrange for rents to be collected

• ensure that where the land is held on trust for a particular purpose, it is used for that purpose and no other

• protect the land, for instance by ensuring its boundaries are clearly defined and by periodically inspecting the condition of the land to make sure that it is not being misused

• arrange for its upkeep, maintenance and, if necessary, improvements

Vesting charity land in the Official Custodian does not change any of the powers of the charity trustees to dispose of it. There may be restrictions on disposing of the land but they will usually arise from:

• the terms of the charity’s governing document

• the Charities Act

• the Housing Associations Act 1985 in the case of a charity which is registered as a housing association

These restrictions apply whether or not the land is vested in the Official Custodian.

9. What needs to be done when land vested in the Official Custodian is disposed of?

The Official Custodian must be made a party to any conveyance, transfer, lease or other deed which concerns the disposal of land vested in him/her.

The Official Custodian does not need to put his/her seal on the deed except in the case mentioned below. Instead, the deed will be signed in the name and on behalf of the Official Custodian by the charity trustees. All the charity trustees will have to sign the deed unless two or more of them have been authorised to do so under the Charities Act.

A case when the Official Custodian ‘does’ have to put his/her seal on any deed which concerns the disposal of land vested in him/her arises if:

• the land concerned was vested in the Official Custodian by an order made under section 76 of the Charities Act 2011 (formerly section 18 of the Charities Act 1993), which gives the commission the power to act for the protection of charities

• the disposal is not authorised by an order of the court or of the commission

In these cases a draft of the deed needs to be sent to the commission for approval. If the draft is approved, the Official Custodian will put his/her seal on the deed at the request of the charity trustees, provided that the disposal concerned does not involve a breach of trust and imposes no personal liability on the Official Custodian.

In the case of registered land, the trustees should also inform the Land Registry of the transaction so that they can amend their records accordingly.

For information about when the authority of the court or the commission is needed for the disposal of charity land, see the guidance Sales, leases, transfers or mortgages: what trustees need to know about disposing of charity land (CC28).

10. The title deeds

The Official Custodian usually allows the charity trustees to keep or have control of the land certificate or title deeds to land which has been vested in him/her.

11. When land cannot be vested in the Official Custodian

The commission will not normally make an order vesting charity land in the Official Custodian if the land was conveyed to trustees:

• under certain provisions of the School Sites Act 1841, the Literary and Scientific Institutions Act 1854 or the Places of Worship Sites Act 1873

• expressly on terms that the land be returned to the donor or their heirs if it stopped being used for the purpose for which it was given

This is because in the above cases, the Official Custodian could become a trustee of the land for non-charitable purposes and he/she can only hold land held on charitable trusts.