Sale of Property - Guidance for Managing Trustees

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SALES GUIDANCE FOR MANAGING TRUSTEES

 

 

There may come a time when property is surplus to requirements or it becomes necessary to dispose of property for another reason, eg, to fund another Project and the Managing Trustees decide to sell the local, Circuit or District property. If you are a Managing Trustee of the property, it is very important that you understand your responsibilities and act accordingly during the sales transaction.

 

The key responsibilities when selling property are as follows:

 

 

Property Consents Management system

 

The first step is for the Managing Trustees to log a project on the Property Consents Management System. The website can be found at: https://propertyconsent.methodist.org.uk. This will allow the Circuit and District to show their support to the sale of the land. District Consent is needed before the sale transaction can be completed. It is the responsibility of the Managing Trustees to ensure that the Project record is completed and final Consent has been given to the Project. Your Superintendent will also be able to assist you with the Consents process and creating the Project Record. However, if you have any further queries, you can contact support@property.methodist.org.uk for guidance.

 

The Managing Trustees should be aware that depending on whether the property is managed locally, by the Circuit, District or Connexion will change who is required to give the appropriate approval to the Project at each stage.

 

  • Local and Circuit Property – the required approval at each level must be given by a different person so that the Project record will show approval and support to the project by three different people.

 

  • District and Connexional Property – After approval is given locally by the Trustees, as there is no ‘Circuit Meeting’, the required Consent to be entered here will be provided by the Connexional Team and then forwarded to the Strategic and Resources Committee to give ‘District Consent’.

 

Once the project has been logged, please ensure that the Solicitors who have been instructed to act on behalf of the Managing Trustees for the sale are provided with the project ID number which should be used with all future correspondence with the Trustees for Methodist Church Purposes (TMCP)

 

 

 

 

Qualified Surveyor’s Report (QSR)

 

The Managing Trustees as Charity Trustees need to comply with the requirements of Charity Law when disposing of land and the next step in the sale is to obtain a Qualified Surveyor’s Report (QSR). This is a legal requirement and must take a specific form in accordance with the Charities (Qualified Surveyors' Reports) Regulations 1992. We have a separate note on these if you require a copy please ask the legal team this can then be forwarded to the Qualified Surveyor the Managing Trustees wish to use for this transaction.

 

The QSR will advise the Managing Trustees on matters such as the current value of the land, advice as to the manner of selling the land, whether any alterations should be made to the land prior to sale and other options available to the Managing Trustees such as obtaining planning permission which may increase the value of the land.

 

Once the QSR has been prepared it needs to be sent to TMCP for approval. Once approval has been given and the Project has District support evidenced on the Property Consents Management System then the property can be marketed in accordance with the professional advice contained in the QSR.

 

Please note the QSR is confidential to the Managing Trustees and should not be disclosed to a potential buyer.

 

 

 When there is a buyer and legal issues

 

Once the property has been marketed in accordance with the Surveyor’s recommendations and there is a buyer, to comply with the Charities legislation the Managing Trustees now need to obtain:

 

  • A written letter on headed note paper from the Selling Agents or Surveyor, if they were the same,  confirming that the land has been adequately marketed, stating the sale price, and certifying that this represents the best price reasonably obtainable in the circumstances.

 

The Managing Trustees should know that although they are responsible for the management of the property, they are not the legal owners of the property. The legal owners (or Custodian Trustees) for nearly all Methodist Properties are TMCP.

 

The Managing Trustees must then instruct a Solicitor to deal with the legal aspects of the sale for them. As Custodian Trustee, TMCP are responsible for overseeing the legal aspects of sales and to ensure the sale is conducted in accordance with Charity/Trust Law and Methodist policy.

 

The Managing Trustees should ask their Solicitor to contact us directly as we have an information note providing guidance on the ‘sales of Methodist property’ which includes template clauses to be inserted into the Transfer.

 

  • Please note that if the Surveyor has recommended that the method of sale of the property is by auction, it is important that the instructed Solicitor contacts TMCP promptly as the legal documentation must be approved by TMCP prior to the auction taking place.

 

 

Check points for Managing Trustees - What is required so that TMCP can authorise the Managing Trustees to proceed to exchange of Contracts

 

TMCP can only authorise the Managing Trustees to exchange of contracts if the following points have been addressed:

 

  • Contract and Transfer incorporating TMCP’s template clauses approved by TMCP.

 

  • If the QSR is more than six months old at the time of exchange, recommendation by the Charity Commission and current Methodist policy require that the Managing Trustees obtain an update from the Surveyor on written headed notepaper updating or confirming the content of the QSR on account of the passage of time.

 

  •  A written letter on headed note paper signed by the Selling Agents or Surveyor, confirming that the property has been adequately marketed, stating the sale price, and certifying that this represents the best price reasonably obtainable in the circumstances to comply with the Charities legislation.  

 

Please note that the Solicitors acting for the Managing Trustees should be informed that TMCP usually require 14 days between exchange of Contracts and completion for allow for the Transfer Deed to be signed by two Board Members and sealed. If the purchaser requires completion within a shorter time, please ensure that TMCP are made aware as soon as possible to ensure there is enough time to contact Board Members as they are not readily available at the Office.

 

 

Preparation for completion

 

In readiness for completion, the Managing Trustees should check that their Solicitors have forwarded the completion statement to TMCP, which includes a note of the Solicitors charges and any costs incurred by the Managing Trustees directly as a result of the sale so that TMCP can check that nothing is out of the ordinary.

 

  • Please note under Standing Order 916(i), only costs incurred directly as a result of the sale can be are deducted from the sale proceeds prior to the Connexional Priority Fund Levy being taken.  General everyday expenses for the property are not allowable expenses that can be taken before levy has been deducted.

 

 

Completion and sale proceeds

 

On completion, the Solicitors should forward the net proceeds of sale to TMCP so that the money can be apportioned in accordance with the Methodist Standing Orders and then invested in the Circuit Model Trust Fund (in most cases). The Managing Trustees may also have taken out grants for the property which will need to be repaid from the sales proceeds. The Legal Officer dealing with the transaction will write to the Managing Trustees about this. 

 

Under Standing Order 970 Connexional Priority Fund Levy (CAPF) shall be charged on all capital money arising from a sale. The amount of levy chargeable is set out in Standing Order 972 which is 20% on the first £100,000 and 40% on any excess over £100,000.

 

However, following Standing Order 970(2) Levy may not be applicable to the sale in the following circumstances shown below:

 

1.   If the property is on the City Centre list

2.   Where land has been held as an investment

3.   If the property has been sold due to compulsory purchase, usually by the Local Authority

4.   If the property was received within the last five years by way of devise or bequest and is no longer required for Methodist Trust purposes

5.   The sale is linked to a replacement project under Standing Order 973         although this should have been agreed at the outset of the Project)

 

To avoid any duplication in work, if the Managing Trustees think one of the following scenarios numbered 1 – 4 applies to the sale, they should inform the Legal Officer dealing with the sale as soon as possible.

 

In respect of point 5, if the Managing Trustees believe that the proceeds for sale should be applied to a replacement project then TMCP should be informed at the outset of the transaction with the Managing Trustees providing as much detail as possible as why the proceeds should be applied to another matter. TMCP will then assist the Managing Trustees by liaising with the Connexional Team who will determine whether or not the proceeds can be classed as a replacement project.

 

The above guidance should provide the Managing Trustees with information about their responsibilities when selling property. If any further guidance is required, please contact the Legal Officer who is dealing with the transaction or email directly to legal@tmcp.methodist.org.uk

 

 


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