What is meant by 'Trust Property'?
Who owns trust property?
Who can buy or sell the property?
Do the Charity Commissioners need to be involved?
How does a PCC go about selling a property?
What about letting a property?
(a) Church Halls
(b) Curates' Houses
Buying a Property
(a) Funding
(b) Gifts

What is meant by 'Trust Property'?
Any property which is held for ecclesiastical and charitable purposes in a parish. Examples include parish halls, curates' houses and other PCC land or buildings. Monetary Trusts are dealt with in Section G10 (2a). Church Schools are similarly
held in trust for educational and charitable purposes and are also dealt with in Section G10 (2b).

Who owns trust property?
In simple terms, the Diocesan Board of Finance owns all Trust Properties, but this does not mean that it has overall control of them. The property must legally be vested in the Diocesan Board of Finance (acting as Custodian Trustee) which retains the Title Deeds and holds the property in trust for the PCC and in some cases, for the incumbent and churchwardens. The PCC or the incumbent and churchwardens have day-to-day control of the property for the purposes of the trust (as Managing Trustee). The statutes which define this relationship are the Parochial Church Councils (Powers) Measure 1956 and the Incumbents and Churchwardens (Trusts) Measure 1964. In the rest of this paper, the references to a PCC also apply to an incumbent and churchwardens, where they are the managing trustees of a trust property.

Who can buy or sell the property?
The managing trustees (the PCC) will take the decision that a sale or purchase is a sensible way forward: this is most usually a resolution passed at a PCC meeting, a copy of which should be sent to the Diocesan Office. The PCC should check with the Office, to make sure there is power under charity law to make the transaction. The Managing Trustees then need to comply with the procedure for a transaction involving a charity property (The Charity Commissioners publish a very helpful booklet explaining this in detail: Disposing of Charity Land CC28).

The Board of Finance, as Custodian Trustee, must ensure that the transaction is being carried out in the best interests of the Trust and on the best available terms. The legal documentation will need to be approved by the Board’s Solicitor on behalf of the Board, which is one of the parties in the transaction. Any proceeds are held for the purposes of the Trust and the involvement of the Board does not mean the proceeds suddenly become available for the Board's own purposes or, for that matter, those of the PCC or the incumbent and churchwardens!

Do the Charity Commissioners need to be involved?
In many cases, the Charity Commissioners do not need to be involved, provided the transaction meets the requirements of the Charities Act 1993 (especially Section 36 of the Act), or other relevant legislation. Broadly, these requirements are that the Trustees must have power to make the transaction, that it must be in the best interests of the charity and that it must be on the best obtainable terms - as tested by open advertising, obtaining planning permission, etc. However, the Charity Commissioners may need to be involved if there is a reason why these requirements cannot be met, for example because the Trustees want to sell a property for less than market value, or because the trust deed does not say how sale proceeds are to be used. Advice on this can be obtained from the Diocesan Office, where the deeds to the property will normally be held.

How does a PCC go about selling a property?

1. The PCC should pass a resolution to sell, and a copy of this should be sent to the Diocesan Office. It should also decide what powers (in agreeing a sale etc.) can be delegated to the PCC Standing Committee.

2. It should approach the Diocesan Office for information about the trusts on which the property is held and any special procedures which may arise in a particular case.

3. It should appoint a suitable surveyor (a member of RICS) and solicitor to act for the PCC. Both need to be aware of the procedures to be followed in dealing with a charity property. The Board’s Solicitor, and where necessary the Board Surveyor, always act for the Board and are also willing to act for PCCs. All fees are payable by the PCC. At an early stage the Board will arrange for the Title Deeds to be sent to its solicitor. Where another solicitor acts for the PCC, the Board’s solicitor must approve the legal documentation needed for the transaction and will charge for this work.

4. Obtain an initial report on the property, from the appointed surveyor with advice on its value, the best method of sale and whether an application should be made for planning permission for alternative use or development (which could affect the value of the property). This initial report should be referred to the Board, which will consider it as quickly as possible.

5. It must instruct the surveyor to market the property on the agreed basis and obtain from him a report recommending sale, once he and the PCC are satisfied that the best available offer has been obtained. The matter should then be referred back to the Board, together with a copy of the report recommending sale, for its consent.

What about letting a property?

(a) Church Halls
The Board does not need to be involved in the casual hiring of a church hall. However, PCCs are urged to ensure that a written agreement is in place for each hall user, setting out the basis of the arrangement and the responsibilities of the user. Examples of hall hiring agreements and advice on avoiding lettings to inappropriate organisations can be obtained from the Diocesan Office. Where it is proposed to let the hall to a single user, and in all cases where a lease for more than 12 months is envisaged, the Board must be involved as for a sale, and a similar procedure applies. In some cases, a licence is granted to enable an organisation such as a scout group or musical society to use a building which the organisation itself has erected on land owned by the PCC. The Board's solicitor can advise on a suitable form of agreement in these circumstances.

(b) Curates' Houses
Usually, the letting will be to an assistant curate or lay worker on a rent-free basis. A standard form of agreement for this purpose can be found at Section D3 of the Handbook, or obtained from the Diocesan Office. For any other letting of a curate's house, PCCs are advised to seek professional advice and to ensure that an Assured Shorthold tenancy agreement is drawn up, even if the letting is to be a temporary arrangement involving someone known to the PCC. The protection of a formal agreement is needed to ensure that the property can be made available when it is needed again for a curate. The Board of Finance will usually be a party to the tenancy agreement.

Buying a Property

Many of the same considerations apply as for a sale. After initial consultations with the Diocesan Office, the PCC will need to obtain a report from its surveyor, together with his recommendation that the purchase is a wise one. The Board will need to give its consent and instruct its solicitor to draw up the legal documents or, if the PCC has its own appointed solicitor, to approve the documents. All property acquired by the PCC must legally be vested in the Board of Finance.

(a) Funding
It is helpful to discuss the proposed funding arrangements for a purchase as early as possible, especially where the sale of another property is involved or where a mortgage or loan may be needed. The Church Commissioners offer a value-linked loan scheme for the provision of housing for assistant parochial staff and details are available from the Diocesan Office. Parishes should be aware of their obligations under the scheme and should consider carefully the basis on which loans are offered. The Board is sometimes able to approve the charging to a bank or building society of property held on parochial trusts on terms to be approved by the Board's advisers. If a bank or building society suggests that it will require personal
guarantors of any advance, it should be informed that the Board is not prepared to permit a mortgage to be taken on that basis. The position can be explained in more detail by the Board, if that seems necessary. The Board is unfortunately not able to guarantee the borrowing requirements of PCCs in any other way.

(b) Gifts
Occasionally a PCC may be offered the gift of a property, either a house or, for example, land used as a church car park. Such gifts are very much to be welcomed, but it is important that the PCC is clear about the terms on which they are offered and that the matter has been discussed with the Board and its advisers. As with other matters, the Board's solicitor will need to approve all documents.