For some, buildings can also be a valuable operational base, or a significant source of income, or both. There are, however, plenty of ways that use and management of property can result in operational difficulties for charities, generate significant financial penalties, or, in some cases, give rise to criminal liability for their trustees and employees. The reputational consequences of breaching legal requirements can be catastrophic, and for those organisations that have the Charity Commission as their regulator, there may be further unwelcome attention.
James McCallum, partner at Russell-Cooke solicitors, considers some of the key problem areas below. James will cover the main areas of risk and how to manage those risks in the “Property and Buildings – avoiding legal pitfalls” session at the Charity Law Conference on 14 June.
Governance and procedures
The trustees and senior employees of a charity must be aware of the requirements of and restrictions contained in their constitution. There is also a complex web of legal rules governing charities and their trustees that permeate all of their activities. In particular, there are specific statutory requirements affecting charities in relation to their property dealings and some charities need to be aware of charitable special trusts affecting their property.
The owners of neighbouring properties may have limited but robust private rights to use your property or to limit what you can do at it, and it is important not to infringe those rights. This does of course require being aware of them in the first place.
If you carry out certain activities that adversely affect people in the neighbourhood or restrict how they can use their property, they may be able not only to bring a private action, but to make a complaint to public authorities resulting in legal action.
Your occupiers and users
You will have to be careful not to infringe any specific rights that you grant to other users of your property under leases and hire agreements. Additionally, there are many legal requirements both under the general law and statute to abide by. These laws regulate your behaviour towards users of your property and concern the layout and condition of your property in order to ensure that it provides a safe and accessible environment for all.
Issues of public amenity
There are core issues arising from questions of authorised planning use and there are often very specific planning requirements affecting buildings, particularly those that are used by charities for operational purposes. There also a number of other legal rights and restrictions that may be enforceable by your local authority which impose additional burdens and restrictions both under planning law and otherwise.
Charities enjoy some very useful tax exemptions and reliefs, but there are very specific rules. They are often principally designed to discourage charities as vehicles for tax avoidance, but they can have some unexpected and very expensive consequences. It does not help matters that the rules can be mind-bogglingly complex, and there are a number of tax traps that charitable organisations commonly fall into.
Assessing the risk
Knowledge and communication are just about everything in risk management, and it is very important to be aware of the sources of information regarding property risks in order to manage these risks. Appropriate records of key issues and effective policies to anticipate and mitigate the risks are essential in the proper management of charity buildings.
Find out more information and book a place at the Charity Law Conference here.