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OCCUPYING COMMUNITY PREMISES

Second Edition

Guidelines for Community Associations And Local Authorities

Edited by Jonathan Dawson, MA, LL.B Community Matters, the National Federation of Community Organisations, has since 1945 supported and represented community organisations from all over Britain. The large majority of its 1,200 members are community associations and similar multi-purpose community organisations, established by local people to meet their social, recreational and educational needs of their own communities, usually managing a community centre as a base for their activities. However, its membership also includes local authorities, housing associations and local development agencies, with which it works in partnership.

Community Matters' primary objectives are to expand the support provided to community organisations, and to ensure that their interests are effectively represented locally and nationally. It does so through an information and advice service, publications, training, consultancy and research and representation.

Jonathan Dawson is a solicitor, and a legal consultant to the voluntary sector. He is Honorary Legal Adviser to Community Matters. Community Matters has taken every care to ensure that the contents of this book accurately reflect the state of the law at the date of publication. However, it should not be taken as a definite statement of law, and readers are advised to seek legal advice on their individual circumstances where they are in doubt.

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library.

ISBN 0 900787 81 3

This book is designed to be photocopied for use in training, and no special permission is required for such limited reproduction, as long as the source is acknowledge. Complete or systematic or large-scale reproduction or inclusion of extracts in publications for sale may be done only with written permission from the publishers.

Published by Community Matters 12-20 Baron Street London, N1 9LL Telephone 020 7837 7887

Community Matters is registered as a charity as the National Federation of Community Organisations

First edition published 1997, reprinted 2001 Second edition published 2005 © 1997, 2005 Community Matters Layout by Anne Jenkins Production Manager Veronica Karrinton Cover Photographs by Barry Myers Photography. Printed by L& T Press, Luton

Foreword

The former local authority associations (AMA, ADC and ACC) enjoyed a naturally supportive and positive relationship with Community Matters through their various working groups and fora including the Community Development Forum. The Local Government Association intends to continue to build on this relationship which I am confident will be even more fruitful and effective now that local authorities are represented by one voice through the LGA. I am therefore delighted to recommend this publication to you.

Working in partnership with community organisations and associations is increasingly important for local authorities in delivering their services and programmes. Of particular importance, in the context of this publication, is the fact that many community centres, whilst being owned by local authorities, are managed by community organisations. In fact, this arrangement is on the increase. At the same time, there is a growing trend for local authorities to want to formalise the relationship with associations through leases and management agreements. The purpose of this publication is to offer some guidance to both local authorities and community associations, to work together in partnership in order to establish a sound and appropriate legal relationship for managing community buildings which are owned by local authorities but managed by the associations.

The area of leases and management agreements between community associations and local authorities is a difficult one and it is important that the documents are framed in such a way as to reflect the nature and purpose of such organisations. Their needs, in most cases as unincorporated charities, are very different from those of commercial organisations with whom local authorities may more commonly enter into agreements. Consequently, this publication will be invaluable to both local authorities and community organisations in negotiating appropriate and satisfactory legal agreements.

Brian Briscoe Chief Executive Local Government Association

Acknowledgements

This book is founded on the work of David Howell MBE, who realised that a publication of this kind was required to meet the need being daily demonstrated through the advisory work of Community Matters, and its trading arm, Community Trading Services Limited, of which David used to be Chief Executive. He brought his unique combination of legal knowledge and practical experience to the idea of both this publication and the production of a specimen lease that would be appropriate to the circumstances of community associations.

With large numbers of local authorities cutting their support to community organisations, and reviewing the leasing arrangements and funding of the community buildings, the time is now right to publish revised good practice on the conditions under which community organisations can occupy them.

Community Matters is grateful to all who have contributed to the collective wisdom that this publication represents. We especially thank Jonathan Dawson and Veronica Karrinton for commitment to this new edition and to Sharon Matthew for her input on asset transfer.

Mention must also be made of David Nash-Brown, of the Charity Commission for updating information in chapter 3 on Charity Law Requirements and Expectations of the Charity Commission.

David Tyler National Director Community Matters Contents Page

Introduction 1 Why these guidelines? 1 What do these guidelines aim to do? 2 The structure of these guidelines 2 Glossary of principal terms 4 Table of principal issues 5 Chapter 1 Legal methods of occupying community premises 9 Leases 10 Security of tenure 10 Negotiating a lease 11 Licence to occupy 12 Management agreements 12 Management agreement without a lease 12 to the community association 12 Management agreement with a lease to 13 the community association Matters usually covered by a management 13 agreement Service level agreements 14 Checklist for a community association 15 when considering a service level agreement Other forms of tenancy 15 Periodic tenancy 15 Tenancy at will 15 Community Matters recommendations 16 Summary of legal methods of occupying 16 community premises

Chapter 2 The holding of property by a community association 18 which is unincorporated or is established as a trust Normal methods for holding property 19 How many holding trustees and who should 20 they be? The position and responsibilities of holding 21 trustees The incorporated community association 22

Chapter 3 Charity law requirements and expectations of the 24 Charity Commission What the law says 24 Holding the property 24 Duty to secure best terms 25 Consulting a surveyor 25 Using a solicitor’s services 25 Protection for the charity and the trustees 26 Sharing the property 27 Wasting asset 27 Fixtures, fittings and equipment 28 Sinking fund 28 Permanent endowment 28 Hiring, sub-letting and mortgaging 28

Chapter 4 Contents of lease and negotiating terms 30 The constitution of the community association 30 and its relationship to the lease Offer of a lease 31 Make representations as early as 31 possible in the process Specific terms of lease or licence 32 Length of lease or licence 32 Assignment and sub-letting of lease or 33 licence Parties 33 Obligations for repairs, maintenance, 33 insurance etc. Rent levels and reviews 34 Limit to liability 34 Restrictive covenants 35 Sub-letting and hiring 35 Break clause 36 Reserved use of building by the local 36 authority What the lease should not contain 36 Changes to the constitution 36 Representative of the local authority on 36 the management committee Unreasonable restrictive covenants 37 Additional problem areas 37 Rates 37

Chapter 5 Asset transfer 39

Chapter 6 Summary and sources of further assistance 43

Appendix 1 Specimen lease 47

Appendix 2 Model trust deed for holding trustees 72

Appendix 3 Sample management agreement 74 Introduction

There are more than 18,000 community buildings in England and Wales managed by voluntary management committees. They may be community centres, village halls, church halls or other similar buildings. Many of them, particularly in urban areas, are owned by local authorities. This book is about the legal basis on which community organisations occupy such community buildings, where they are owned by local authorities or other public or private bodies.

WHY THESE GUIDELINES?

Two recent trends have emphasised the need for a publication of this kind. A growing number of local authorities are now seeking to formalise the basis on which they make available community buildings, rather than relying on the unwritten, informal arrangements that have often existed in the past. This can benefit both parties, but it does need to be implemented in a way which takes full account of the status and the circumstances of the community building's management committee.

A second trend is for local authorities who have previously managed community buildings directly to seek to hand them over to a voluntary management committee. Usually they will seek to do so on the basis of a formal agreement of some kind.

Yet in Community Matters' experience, there have been too many cases of community associations being presented with a form of lease by their landlord which fails to recognise the legal status of the community association, ignores the requirement for holding trustees in the case of unincorporated community associations, and reserves to the landlord rights and powers which remove the right of the community association to self-determination. Some landlords use forms of documentation more suited to commercial, trading organisations. In the case of local authorities, this happens often because either officers in the Estates or Legal department are unfamiliar with charities in general and community associations in particular, or there is a breakdown in communication between officers in the Estates and Legal departments and any community development officers.

Furthermore, the negotiation and agreement of a lease for their occupation of premises is one of the most difficult tasks faced by lay charity trustees. Most community associations are at a double disadvantage during this process: first, the law and the language of the law relating to leases is complex and often represents a barrier to understanding by lay persons; second, it is an unfortunate fact that few landlords fully understand the legal framework within which community associations operate, the rationale of community associations and organisational problems they face.

In order to work their way through the maze of negotiations, to reach agreement with the landlord on reasonable terms of occupancy, and to manage the terms of a lease on a day to day basis, it is essential that charity trustees have a basic understanding of the main legal issues involved and have access to detailed advice on the methods of protecting the interests of their community association.

In the same way, it must be to the advantage of officers of the local authority in such a situation to understand the constraints under which charitable organisations operate and the practical implications of the documentation and the terms they are offering.

1 WHAT DO THESE GUIDELINES AIM TO DO?

These Guidelines are designed to:

 inform charity trustees of the relevant legal requirements relating to the constitutional and charitable status of their charity, and to guide those responsible for negotiating any lease on certain fundamental terms and conditions of occupancy of premises by charitable organisations;

 assist charity trustees, landlords, particularly Local Authorities (their Community Development and Estates departments), and their advisers in the process of negotiating a lease or other formal arrangement.

This book does not attempt to be a comprehensive manual on the subject. It should, however, assist readers in directing their attention to other sources of information and providing an element of understanding of what charitable community organisations are about and how their interests are best protected. Generally, the advice in the guidelines is directed at all charitable community associations, although Chapter 2 concerns only those that exist as unincorporated associations or as trusts.

THE STRUCTURE AND CONTENT OF THESE GUIDELINES

In urban areas, the most widespread form of organisation managing a community building is the community association, that is an organisation which has adopted some version of the Model Constitution for a community association available from Community Matters (the National Federation of Community Organisations). In rural areas, the most widespread organisational form is that of the village hall, usually based upon the model trust deeds for village halls supplied by Action with Communities in Rural England (ACRE). These guidelines will be relevant to most similar organisations, but for simplicity the term “community association” is used throughout.

In urban areas, the majority of community buildings are leased from a local authority. In rural areas, most are owned freehold by the village hall management committee, but leasing is more common where new halls are provided.

In an unincorporated community association, the main executive decision-making body is usually called the general committee or council; in a community association established as a trust, the trustees of that trust manage the association whether or not they call themselves a committee; in a village hall, the main executive decision-making body is usually called the village hall management committee. The members of the general committee or council, the trustees of a community association established as a trust and the members of the village hall management committee are all charity trustees for the purposes of the Charities Acts. For simplicity, these individuals will be referred to throughout as “charity trustees“ whatever type of organisation they manage.

The tables which start after the glossary are intended to be a quick reference to a selection of the principal issues commonly faced. They provide a framework to enable charity trustees to discuss how to address the issues and include statements of good practice. Two angles are covered: that of the community association, and that of the landlord with a number of issues specifically affecting local authorities and other public bodies. Even where there is a working partnership

2 between a community association and its local authority, their interests are mutually exclusive in terms of their responsibilities and their duty to their constituents. Each issue is dealt with in detail in the ensuing chapters and appropriate references are given in the right-hand column against each issue described.

The ensuing chapters follow a sequence starting with a review of the legal methods used for the occupancy and use of community premises by charitable community associations. Chapter 2 gives an explanation of what constitutes an unincorporated community association and why it is necessary to appoint holding trustees. Chapter 3 reviews some of the requirements of charity law and the expectations of the Charity Commission. Chapter 4 covers the negotiation process itself: what a lease should and should not contain and how the interests of community associations can best be protected. Chapter 5 explains the policy and practice relating to asset transfer. Chapter 6 provides a brief summary of the main points, and lists information sheets, leaflets and books that provide further information, and organisations, which can provide further help.

A specimen lease is set out in Appendix 1 with a model declaration of trust to be signed by holding trustees set out in Appendix 2. A sample management agreement is given in Appendix 3. Community Matters is happy to offer further advice either to community associations or local authorities, or both and can provide a consultant to assist in the negotiation of an appropriate lease, if required.

ACRE'S Model Trust Deed B contains a specimen lease for village halls. ACRE also provides a national advisory service for village halls and supports advice services for village halls provided locally by its member rural community councils. See Chapter 6 for ACRE'S address.

3 Glossary of principal terms

Term Meaning

“Charities Acts” the Charities Acts of 1992 and 1993

“charity trustees” members of the executive decision-making body of a community association or village hall

“constitution” the objects, rules and regulations which govern a community association or other voluntary organisation, as set out in its governing document(s)

“corporate body” a body created by or established in accordance with an Act of Parliament, e.g. a company, a Local Authority or a parish council

“covenants” undertakings by someone to do or not to do certain things in relation to the occupation of property, such covenants to be found in a lease or licence

“custodian trustee” a corporate body, such as a public body, which acts as trustee for a charity in relation to the holding of title to land

“holding trustees” individuals appointed by the charity trustees who act as trustees for a charity in relation to the holding of title to land

“ management the executive decision-making body of a community association committee” elected by its members

“Official Custodian” the officer appointed pursuant to the Charities Act 1993 whose function is to act as trustee for charities in relation to the holding of title to land

“security of tenure” first, the right to occupy premises in accordance with a lease or licence without a landlord seeking to exclude the tenant; and, second, the right to seek and negotiate a further term of occupation beyond the original term of a lease

“ unincorporated an organisation being an association of individuals who agree to association” be bound by a constitution, one that is not established as a company or as an Industrial and Provident Society

“trust” an organisation constituted by a Deed of Trust

4 Table of Principal Issues

Issue Landlord considerations Community association Good practice considerations Paragraph Reference 1. Type of occupation:  Lease Dependent on a Local The ideal method of occupying 1.5 et seq. Authority’s community property other than buying the development policy. May only be freehold. It gives an interest in prepared to grant short term. land and the statutory security of Loses some control over building tenure provisions of the Landlord due to exclusive possession given and Tenant Act 1954 should 1.6 to community association. apply. The community association’s right to statutory security of tenure beyond the term of the lease might be seen as a problem.

 May be preferable to a lease The next best method of 1.11 et seq. because of reduced rights of occupying property. It does not occupation and thus greater give an interest in land or enable power for landlord to control, and full security of tenure to be no statutory security of tenure obtained. Accordingly, beware onerous repair or decoration covenants, and impact of lack of security on fund-raising from grant-making bodies.

 Licence Useful for establishing respective Does not give right to occupy 1.11 et seq. rights and duties where local property. lease or licence required authority, as landlord, is as well. Advantageous where a providing active support to a strong partnership with local community association. authority. Beware, however, that Opportunity to control activities local authority policy may beyond the licence or lease. change. Local authority may seek to control activities.

Local authority may place staff Beware the possibility of the under control of the community local authority being deemed to association and require it to have transferred its community manage them under the development business to the management agreement. community association with the result that the Association must honour the staff’s existing terms and conditions of employment.

3. Identity of Landlord may seek to have all The charity trustees should not 2.5 et seq. tenant and who charity trustees become parties to sign and hold title to the lease or signs the lease or and to sign the lease or licence. licence in their own name. Title licence should only be held by holding trustees or a custodian trustee, preferably with provision for vesting in the Official Custodian.

5 Issue Landlord considerations Community association Good practice considerations Paragraph Reference 4. Length of Long term may result in loss of For as long as possible, 4.11 tenancy control over running of building, preferably at least 28 years, depending on terms. If Local although this can be a substantial Authority has little concern for commitment. It gives the charity community development, then trustees confidence to plan. may seek a short term. Ironically, A long term lease provides a local authority which is necessary leverage for the concerned in how the building is community association to obtain used may think a long term lease charitable funding which is only gives too much independence. made available where there is security of tenure.

Community association could argue that a long term permits a management agreement with the local authority which would establish good practice for future development.

5. Rent Local authority, as landlord, may The work of and services 4.17 have one of two perspectives: provided by a community association should be seen as a -letting to community association contribution to the community at is the same as any other large and any rent should be commercial letting and a market nominal. rent should be charged; In addition to rent, community 4.15 -letting to community association association may be required to is an integral part of its undertake substantial repair community development policy covenants. and rent should be set at a nominal level

6. Sub-letting Landlord might regard If the community association 4.26 community buildings as for intends to run a bar, cafeteria, or single-use and single-occupancy social club, or to let space to a by the community association, doctor’s surgery, then such and accordingly forbid sub- operations may need to be split lettings. from the community association itself. The separate bodies will require specific parts of the building to be sub-let to them (but see 7 below).

Community associations must appreciate that a grant of exclusive occupation of part of the building to an affiliated organisation may constitute a sub-letting.

6 Issue Landlord considerations Community association Good practice considerations Paragraph Reference 7. As in the case of sub-lettings, the A useful tool for a community [ ] Occupational landlord might forbid the association that wishes to licence granting of an occupational recognise the non-exclusive licence even though it will not occupation of part of the property create a landlord and tenant by an important user of the centre relationship. 8. Hiring of Should have no objection to A potential source of funds and 4.26 rooms hiring of rooms provided no sub- an opportunity to enable other letting occurs. May seek to community groups to share control basis of hiring or facilities on a relatively informal selection criteria. basis. Local authority attempts to control hirings may be unreasonable restrictive and conflict with a community association’s constitution. On the other hand, they may insist on non-discrimination, requiring community association to develop good practice in order to comply.

9. Repair Depends on attitude and detail (if Usual obligations to keep interior 3.6 to 3.20 obligations any) of local authority’s in good repair would be community development policy. acceptable. But beware any Landlord normally assumes inherent defects: take 3.1 responsibility for exterior, piping professional advice! and services, with community Any decision to undertake association being responsible for substantial repair obligations the interior. must be taken in the interests of, and in accordance with the finances of, the community association.

The community association may be prepared to assume repair obligations for the entire property where only a nominal rent is being charged. Take account of the expectations of trustees by the Charity Commission.

10. Limit to Although landlord may not The charity trustees will want to 4.19 personal liability expect more than a nominal rent, make landlord aware of the it may not welcome any attempt personal nature of volunteering. to limit personal liability. Individual volunteers, acting as holding trustees or as charity trustees cannot be expected to assume personal responsibility, and the association itself must not be made liable for a sum greater than the value of its assets.

7 Issue Landlord considerations Community association Good practice Considerations Paragraph Reference 11. Landlord may wish to exercise Community association is an 4.2 Constitution of control over this. independent body and should not community Landlord might seek to include be subject to third party control. 4.5 association the community association’s The inclusion of the constitution constitution (or simply the (or simply the objects of the objects of the community community association) in the association) in the lease. lease could cause the creation of two charities in error and will be NB Neither of these is acceptable difficult to resolve in the future. to the Charity Commission. Traditionally, the situation for village halls may have been different: contact ACRE.

12. Local authority may, in Community Matters’ Model 4.31 Representation accordance with its community Constitution incorporates this on the development policy, wish to have provision. The community management the right to appoint its association will wish to bring to committee. representative to the management the attention of the local authority committee. the fact that any such representative is a charity trustee and needs to act at all times in the interests of the association and not merely as a representative of the local authority.

13. Need for Landlord will rely on its own Community association must Chapter 3 independent advisers and local authority will comply with charity law and the professional rely on its officers who may or expectations of the Charity advice may not understand the voluntary Commission and seek and charitable status of the independent professional advice community association. (e.g. from Community Matters).

14 Charity Landlord may not think it should Essential to be aware of these. Chapter 3 Commission know these, but it is helpful to Also helpful to draw the attention requirements take them into account as it aids of the local authority to these. in understanding the special position of community associations as tenants.

15. Rates All charities are entitled to 80% Community associations should 4.33 mandatory rate relief and local request the additional 20% authority may consider a request discretionary rate relief from the for 20% discretionary relief. local authority. Application for the additional 20% must be made annually.

8 9 Chapter 1 LEGAL METHODS OF OCCUPYING COMMUNITY PREMISES

This chapter explains the principal legal methods of occupying community buildings and, in the case of a lease, the question of the right to remain in possession both during and after the term of the lease. It also addresses management agreements and service level agreements.

1.1 Unless community associations own the freehold interest in their community buildings they normally occupy them under some form of legally binding contract such as a lease, licence, or management agreement. The different types of contract serve different purposes and should not be confused with one another. The type of contract made available to a community association determines the manner, or tenure, in or under which the premises will be occupied and the security that the community association has in regard to such occupation. If long term occupation and security of tenure is required then a lease is the best and the most usual form of contract. A lease will grant an interest in land for a term of years, and because community associations are effectively businesses in their own right, security of tenure beyond the original term of the lease should be available to the community association under the Landlord and Tenant Act 1954 (see paragraphs 1.6 to 1.8 below). Other forms of contract may be appropriate in certain circumstances but great care should be taken when deciding because they are not automatically interchangeable and a wrong choice will have serious implications for both landlord and tenant.

1.2 Of the three forms of contract described in this Chapter, only the lease and the licence provide the legal right to occupy property. A lease or a licence should only be held by an unincorporated community association or by a community association or village hall established as a trust via holding trustees (as discussed in Chapter 2). Management agreements are concerned with the provision of certain services and activities at local authority premises in return for some form of support from the local authority such as financial, support in kind, or human resources. They are not intended to grant any interest in land or right to occupy land and are entered into directly by the charity trustees without the need for holding trustees.

1.3 Many community buildings are owned by local authorities. The type of contract offered will be determined by their policy (if any) on support to community associations and the level of resources available. It is in all parties’ interests that community associations be involved in the drawing up of the contracts and be able to negotiate the terms.

1.4 The different types of contract are now described more fully showing which is most appropriate in various situations and correcting some common misunderstandings. Brief details are given of provisions that, from the community association’s viewpoint, should be included and those that should be deleted or reduced in effect. This is discussed in greater detail in Chapter 4. Community associations should always obtain independent advice when negotiating any contract and not rely on officers of the local authority or of any other landlord or its advisers.

10 LEASES

1.5 A lease is a legal document which gives the tenant an interest in land, a ‘stake’ in the property. A lease will normally grant to a tenant an exclusive right to occupy the premises. In the case of an unincorporated community association and a community association or village hall established as a trust, i.e. those that are not constituted as companies limited by guarantee or as industrial and provident societies (see Chapter 2, paragraph 2.1), the lease should be granted to holding trustees, and preferably, providing the community association is a charity, with a provision for the lease to vest in the Official Custodian on behalf of the community association. It is not possible for the Official Custodian to be the tenant directly under the lease: the lease is first granted to holding trustees after which the charity trustees ask the Charity Commission for an order vesting the title to the lease in the Official Custodian. It is best to wait a short while, perhaps 6 months or so, before contacting the Charity Commission for a vesting order.

Such holding trustees or the Official Custodian hold the title to the lease in simple, bare trust, i.e. their only interest is to hold the title on behalf of the community association. It is the charity trustees of a community association, the members of the management committee, who will be responsible for the management of the premises in accordance with the lease. It is possible, often in the case of village halls, for a lease to be granted to a custodian trustee: see Chapter 2, paragraph 2.6 for an explanation.

Security of tenure

1.6 This is to be understood in two parts. First, it relates to the freedom of a tenant to continue occupying a building under a lease without the risk of the landlord taking possession during the term of the lease unless, of course, the tenant is in breach of its covenants. Second, it relates to the right, in certain circumstances, to seek a further term of occupation beyond the original term of the lease. A lease gives the most security of tenure during the term of occupation because it creates an interest in land. Unless there is a break clause in the lease, the landlord will only have the right to seek to forfeit the lease, i.e. to request a court to terminate the lease, where the tenant is in breach of covenant.

1.7 The provision of community facilities in a community building by a community association constitutes a business for the purposes of the Landlord and Tenant Act 1954. Accordingly, a lease granted to a community association for a period greater than six months will be subject to the provisions of that Act. The 1954 Act provides that on the termination or the expiry of a contractual fixed term or of a notice to quit in relation to a business tenancy the contractual tenancy will automatically continue on the same terms. At this time, the parties will undergo a lengthy process concerning the grant of a new lease.

1.8 The 1954 Act has been changed substantially by the Regulatory Reform (Business Tenancies) (England & Wales) Order 2003 which came into effect on 1 June 2004. A landlord can seek to have the provisions of the 1954 Act removed from the lease in circumstances where it has reached agreement with the tenant to do so. However such agreements will be void unless the landlord has served a ‘health warning’ notice on the tenant not less than 14 days before the tenant enters into the tenancy to which it applies, or (if earlier) becomes contractually bound to do so. This notice draws to the tenant’s attention the fact that the security of tenure provisions of the 1954 Act are to be excluded from the lease. The tenant must, before entering the tenancy or becoming contractually bound to do so, make a declaration to the effect that the tenant acknowledges receipt of the landlord’s notice and accepts the consequences thereof. In such case,

11 the lease terms offered to the community association will be on the basis of no statutory security of tenure beyond the term of the lease. It is for the community association to decide whether it is prepared to proceed on such basis. The problem faced by all tenants, not just community associations, is that the landlord might suggest that the only way in which it will grant the lease is on the basis of the security of tenure provisions of the 1954 Act being excluded.

Community Matters recommends that landlords should not attempt to remove the security of tenure provisions of the Landlord and Tenant Act 1954 as many funders will only grant aid building refurbishment or redecoration costs where a charity has adequate security of tenure.

Negotiating a lease

1.9 Normally, a community association will be at a disadvantage to the local authority, or any other landlord, when it comes to negotiating terms. Where a landlord owns several community buildings and is prepared to do business with a number of community associations, negotiations might best be done through a representative body, such as a local Federation of Community Organisations.

LICENCE TO OCCUPY

1.10 A licence to occupy premises is commonly confused with a lease because it usually covers the same ground and has been used by landlords as an attempt to avoid the consequences of statutory security of tenure referred to above. Unlike a lease, an occupational licence does not give an interest in land, therefore the Landlord and Tenant Act 1954 will not apply.

1.11 A licence will usually allow occupation for a shorter period than a lease and tenant’s obligations concerning repairs, maintenance and decoration should be less onerous. Otherwise an occupational licence, though usually shorter, will include clauses similar to those contained in a lease. Chapter 4 gives information on what an occupational licence should contain and how it might be negotiated. The problem for community associations is that lack of security of tenure and the grant of only a short term of occupation could raise serious problems for a charity wanting to raise funds to invest in developing or renovating the building; it can also have an adverse impact on volunteers’ commitment because it can reduce confidence in the long-term success of the community centre.

For a temporary building an occupational licence may be the best option but if an occupational licence is set to be renewed on an annual basis then Community Matters would recommend negotiating a lease.

MANAGEMENT AGREEMENTS

12 1.12 Management agreements are most usually found where the local authority has a clear policy of support to community associations and where a strong partnership in providing services to meet community needs has been developed. The areas concerned are frequently well resourced in terms of community development staff, grant aid and staffing of the community buildings.

1.13 A management agreement is an agreement between the local authority and the charity trustees of the community association to work together in the operation of the community building for the benefit of local people. It does not give the organisation any right to occupation or ‘stake’ in the building and therefore does not replace and should not be read in the same way as a lease or an occupational licence.

Community Matters recommends that where there is a management agreement in place there should also be a contract giving rights of occupation, preferably a lease, in order to obtain security of tenure.

1.14 A management agreement is designed to specify clearly the respective obligations of the parties. These may include staffing and running costs (direct or grant aided), repairs and maintenance, training and support from the local authority. In return the community association would be expected to manage the centre in line with its charitable objects and within the local authority policy by providing services to meet local needs and involving good practice in equal opportunities and financial matters. Although there is likely to be a degree of mutuality between the local authority and the community association, the local authority might decide that it would be best for the community association to restrict or design its services and procedures around the local authority’s policy. Although this may be a reasonable decision for the local authority as a question of policy, it can cause charity law problems for the community association. It is important that local authorities recognise that they must not compromise the community association’s position under charity law or restrict its autonomy or its charitable objects.

1.15 There are two situations where management agreements are used, one where the local authority retains responsibility for the building, and the second where the community association has responsibilities under a leasing arrangement.

Management agreement without a lease to the community association

1.16 In this case, the local authority retains responsibility for the building and all related costs including repairs and maintenance, running costs, staffing and the Unified Business Rate. The community association enters into a management agreement with the local authority on the provision of services and activities within the community building that meet local needs.

1.17 The management agreement would deal with the hire of the centre, handling of bookings, charges, reporting repairs, health and safety, future planning and monitoring the programme and attendance at the centre.

1.18 The disadvantage for the local authority of this type of arrangement is it is more costly. The disadvantage for the community association is that they have no security of tenure and are therefore very vulnerable to any change in local authority policy.

13 1.19 The advantage to the community association is that it may be much more successful in providing activities that meet local needs because it is not overburdened with the responsibilities and cost of a building and staff (where relevant).

Management agreement with a lease to the community association

1.20 The lease will cover the right of the community association to occupy the building and will provide security of tenure (see paragraphs 1.1 to 1.8 above). The management agreement will not be about the building so much as being a partnership agreement and code of practice in managing the activities and services within the building. It is about the provision of resources and support in kind from the local authority, often linked to grant aid, in return for well-managed services and facilities for the local community. A management agreement is recommended where a joint provision scheme is being set up. An example is where community facilities are established on school premises: a management agreement can record times of access to joint areas, apportionment of costs relating to cleaning and caretaking. ACRE provides guidance in this area.

1.21 The lease will allow the community association a greater opportunity to retain its independence and autonomy whilst providing both parties with the opportunity for negotiating additional support and services through the management agreement.

Matters usually covered by a management agreement  Date and duration of agreement (1, 2 or 3 years)  Parties  What the Local Authority will provide/consider (usually under its current policy): Grant aid - Costs related to the building (e.g. utilities, rates, repairs and maintenance) - Staff and running costs - Support and information and advice through its Community Development staff - Training - Equipment  How the community association will operate (e.g. in accordance with Community Matters Model Constitution) and what it will work towards: - Sound democratic management and equal opportunities - Providing a focal point for the local community and developing local skills - Meeting educational, recreational and social welfare needs of the community - A plan to develop the community association and the centre - Monitoring activities and producing an annual report - Operating and managing the centre in accordance with good practice  What both parties agree to consult on: - Recruitment, employment and supervision of local authority staff based at the centre - Health & Safety Policy and Code of Practice - Community needs and programmes to meet those needs - Support of volunteers - Provision of a bar, café or other trading activities

1.22 A management agreement can benefit both parties in developing good practice as well as formalising and retaining previously unwritten agreements for the future. Reviewing such an agreement annually can also provide a useful occasion for training for charity trustees. It may at

14 first seem restrictive. In fact so long as each clause is discussed in detail and changes negotiated where necessary it can be a very useful aid in managing the building.

1.23 It is important to ensure that all the things normally in a management agreement are not put into the lease. They are separate documents with different purposes and should not be confused. They may well cross-refer to each other but it is important that the continuance of one is not dependent on the continuance of the other.

Community Matters recommends that management agreements and leases remain separate and not linked to each other. Thus, any clause which permits the landlord to forfeit the lease in the event of breach of the management agreement is unfair to the community association and is not in either party’s interests.

SERVICE LEVEL AGREEMENTS

1.24 This is included only because of the increasing popularity of such agreements particularly where a local authority has specific, separate services that it expects a community association to provide. It gives no right to occupy community buildings and should not be confused with a lease or a licence.

1.25 A service level agreement is an agreement, for an agreed period of time, between two partners, usually the local authority and the community association. It lays down the service that is to be provided in return for resources, usually financial or staffing. Performance indicators (targets to indicate ability to provide the services to a set standard) will usually be set and there will be an agreed procedure for monitoring and reviewing the outcomes.

1.26 There is a growing trend in the use of a service level agreement as a condition of grant aid, secondment of staff to an organisation, or the provision of a specific service such as ‘meals on wheels’ or ‘day care’. It can be a very good way of clarifying and formalising arrangements providing there is an open two-way negotiation process and that monitoring and performance indicators are appropriate to voluntarily managed charitable organisations. Care should also be taken when negotiating a service level agreement that the conditions do not compromise the charitable position of the community association or restrict it in any way from meeting its charitable objects.

15 Checklist for a community association when considering a service level agreement

Review the community associations:  purpose and objectives  constitution and structure (does it need changing or updating?)  roles and responsibilities of committee members

Consider:  Does the service wanted by the funder meet your objectives?  What needs are you meeting and are there adequate resources?  Is there sufficient support and training for volunteers and staff?  Financial position (income and expenditure)  Does the money or other resources provided by the funder cover all your costs or the service? (Are non- cash inputs recognised?)  Will the service restrict your other activities/services in any way or will it support your core work?  Will you be required to change your practice or policy in any way?(e.g. safety, staffing and volunteers)

How will the agreement be managed/monitored and re-negotiated?

Negotiate:  Ensure service delivery can be achieved  Ensure it does not compromise the charitable position of the community association  Check the financial and organisational implications for all options.

Make a Decision

OTHER FORMS OF TENANCY

Periodic tenancy

1.27 It is possible for a lease or a licence to exist which creates a periodic tenancy, i.e. one that, unless terminated by either party, rolls over for consecutive periods. A periodic term can be weekly, monthly, quarterly, or yearly, depending on what is expressed in the lease or licence or, if not expressed as such, what the parties intended. The longer the periodic term the better for the community association in terms of security.

Tenancy at will

1.27 A tenancy at will exists when the tenant occupies property with the landlord’s consent on the understanding that either the tenant or the landlord may terminate the tenancy at will. There is no requirement for such tenancy to be in writing. No notice is required by either party. This form of tenancy is not recommended because of the lack of security of tenure.

16 Community Matters recommendations  Community associations should occupy a community building under a lease or a licence.

 Management agreements and service level agreements can be useful additions in formalising partnership arrangements between the local authority and the community association in the provision of services to meet local needs and the support for the community association. They do not replace a lease or licence as they give no security of tenure for a community association occupying a community building.

 Where there is an intention for the community association to occupy premises for more than one year, the community association will need the security provided by a lease in order to carry out its responsibilities.

SUMMARY OF LEGAL METHODS OF OCCUPYING COMMUNITY PREMISES

Lease  Concerns rights to occupy a building  Sets out landlord and tenant obligations regarding the building  Title held by holding/custodian trustees  Provides security of tenure for community association during occupation and statutory security of tenure beyond the term unless this has been agreed to be removed  Long term recommended  Should not control the activities or the management and constitutional arrangements of the community association

Licence  Concerns rights to occupy a building for a short term (usually annually)  Simpler form of tenure with no interest in land created  Provides no statutory security of tenure for community association beyond the agreed term  Should not control the activities of the community association  Best suited form of tenure for very temporary buildings or for the temporary use of buildings.

17 Management agreement  Not a form of tenure for a community building.  Concerns the management of the building and the activities of the community association  Agreement between the local authority and the charity trustees of the community association  Commits the community association to providing facilities, services or activities to meet local need in partnership with the local authority  Commits the local authority to providing a certain level of support over a specific period (usually 1 or 2 years)

Service level agreement  Not a form of tenure for a community building  Partnership agreement on service to be provided in return for resources (usually financial or staff or both)  Agreement between the local authority (or other body) and the charity trustees of the community association  Sets performance indicators  Includes monitoring and review process

18 19 Chapter 2 THE HOLDING OF PROPERTY BY A COMMUNITY ASSOCIATION WHICH IS UNINCORPORATED OR ESTABLISHED AS A TRUST

This chapter explains what is meant by the terms “holding trustees”, “custodian trustee” and “Official Custodian” and why community associations which are unincorporated or established as trusts should select and appoint holding trustees for the purpose of entering into a lease or licence.

2.1 Unless the community association has been formed as a company limited by guarantee, an Industrial and Provident Society, a community interest company or a charitable incorporated organisation (see paragraphs 2.17 below), it will necessarily exist in the form either of an unincorporated association or of a trust. An unincorporated association is basically a collection of individuals who join together to carry out a mutual purpose, otherwise than for profit, in this case to develop community interests and perhaps establish and run a community centre. An unincorporated association is founded by the agreement of individuals, who determine the objects of the association and the manner in which it is to be run, such items being formally recorded in a constitution. A trust is established by a trust deed, which nominates a number of trustees to hold money and other property on trust to use and manage the same for a particular purpose or purposes.

An unincorporated association or a trust have no legal existence in their own right apart from the members or trustees of which it is composed.

2.2 No separate legal entity (e.g. like a company) comes into being on the formation of an unincorporated association or the establishment of a trust. Accordingly, if an unincorporated association or a trust wishes to do something in its own name, for example, to enter into a contract, it must ‘borrow’ the legal identity of certain individuals. The individuals who ‘lend’ their legal identity or name and who enter into a contract on behalf of their association or trust are:

 in the case of an unincorporated association where no management committee has been established, the members themselves  in the case of an unincorporated association where a management committee has been established, the members of such management committee, i.e. the charity trustees  in the case of an association established as a trust, the nominated trustees.

2.3 The position is more complicated if an unincorporated association or trust wishes to enter into a lease or other agreement relating to the occupation of land. In such instance, the unincorporated association or trust should (subject to our comments in paragraph 2.7) nominate no less than four individuals to enter into the lease or other agreement on behalf of the

20 unincorporated association or the trust. Such individuals will be known as holding trustees and they will hold any interest in land as trustees for the unincorporated association or trust. It is preferable that such persons are not chosen from among the members of the management committee or, in the case of a community association established as a trust, are not also the trustees of that trust (see paragraph 2.8).

The law does not prevent the holding trustees from being charity trustees of the community association. However, Community Matters strongly advises against this to avoid confusion and conflict of interest. In the Model Constitution for a community association, holding trustees are required not to be charity trustees.

2.4 This requirement, i.e. that the lease is taken in the name of four individuals on behalf of the community association, is unfortunately not widely known amongst many unincorporated associations or trusts or landlords. Community Matters is aware of numerous cases where one of the officers of a community association has taken a lease in their own name on behalf of their community association. The problem that the community association faces, in addition to the confusion and conflict of interest already referred to, is that charity trustees face regular elections or may leave the area and cease to be involved with the community association. This has two consequences:  upon the charity trustee losing office it would become necessary for the lease to be altered and assigned, possibly on a regular basis, because the parties to the lease keep changing;  on ceasing to be a charity trustee, unless the charity trustee is released by a term in the lease or the landlord otherwise agrees, he or she may find him or herself continuing to be personally responsible for the lease: a position which should be unacceptable to the landlord, to the association and to that individual.

NORMAL METHODS FOR HOLDING PROPERTY

2.5 The traditional method employed by community associations and many other unincorporated associations and trusts is to select and appoint a number of individuals over the age of 18 to act as holding trustees of the title to a property. These holding trustees should not, of course, be disqualified under the terms of the Charities Act 1993. They will hold the title to property on the basis of a bare or simple trust on behalf of the community association. The community association itself acts through its management committee (or where the community association is established as a trust, through its appointed trustees) who are charity trustees for the purposes of charity law and the Charities Acts. It is for the charity trustees to select and appoint holding trustees. They should not leave it to the landlord or anyone else to do so.

21 Community Matters and ACRE in fact recommend that title to property is vested in the Official Custodian, an office created by charity law for the purpose of ‘holding’ property on behalf of charities. This brings clarity to what can be a confused situation and avoids many problems associated with the method of appointing holding trustees.

The process of vesting the property in the Official Custodian involves the appointment by the community association of holding trustees who take a lease of the property. Thereafter the community association asks the Charity Commission to make an Order vesting the title to the lease in the Official Custodian. The forms and procedures are available from the Charity Commission.

2.6 Unincorporated associations and trusts can use a custodian trustee. A custodian trustee is a corporate body, e.g. a parish or town council, and is to be distinguished from holding trustees (who are individuals). This is a method used by some charities which is quite legitimate but, for community associations, it is a method that has many conflicting strong views expressed both in favour and against. It is not a method that will be given attention in the context of these Guidelines. However, in the case of village halls, the use of a parish council to act as a custodian trustee is common and is recommended by ACRE as a second preference to the Official Custodian.

How many holding trustees and who should they be?

Community Matters recommends that at least three and preferably four holding trustees be appointed.

2.7 In law there must be two. The reason is quite simple. Holding trustees are human and they do not live forever or remain subject to the control of a charity. Often experience shows that the community association loses touch with holding trustees and this has meant, for instance, finding that one has emigrated (address unknown) and another has died. The result can be a legal nightmare. Appointing three or four people is therefore a practical issue that should be drawn to a landlord’s attention at an early stage.

2.8 As mentioned in paragraph 2.3, it is preferable not to appoint holding trustees from among charity trustees, even where the landlord recommends it. There are three principle reasons. First, the question of different roles: holding trustees only hold the title to property on behalf of the charity, it is for the management committee to manage the property. Second, members of the management committee are elected under the democratic structure of the organisation’s constitution and these members change regularly. Finally, it is not unknown for members of the management committee who also hold title to property to suggest to their fellow management committee members (who do not hold the title) that their responsibilities for the property are somehow greater than those of the other members and that their views on the

22 management of the property should prevail (what is commonly referred to as the ‘hierarchy problem’). This is, of course, not true and can be a cause of confusion and argument within the community association.

The position and responsibilities of holding trustees

2.9 The holding trustees’ responsibility is to hold the title to a lease on behalf of the unincorporated association or trust: they have a disinterested responsibility in holding the leasehold interest and, strictly, their only duty is to comply with the wishes of the charity trustees. The same applies if the charity trustees choose to vest title to the property in the Official Custodian. Holding the property on a simple bare trust means that the holding trustees or the Official Custodian can accept no responsibility for the operation of the lease and would not be obliged to attend any meeting of the charity trustees called to discuss any matter relating to the lease.

2.10 From the landlord’s perspective, the named tenant must assume full responsibility for the lease and for the management of the building. At first sight, the landlord might be concerned about the role of holding trustees as described above. The landlord might even attempt to draft the lease on such a basis that the holding trustees as responsible for, and liable under, the lease. This situation should not arise and should not be allowed to arise for the following reasons:

 the holding trustees enter into the lease on behalf of the community association. Accordingly, the landlord should not expect such holding trustees to assume personal liability, and the landlord should look to the community association to perform the covenants under the lease;

 a well drafted lease should specify that the community association, through its management committee, is liable for the operation of the lease and for the performance of the covenants. Community Matters’ specimen lease (Appendix 1) deals with this by including appropriate wording (clause 1.2).

On a point of technical information this paragraph does not include reference to the Official Custodian because the lease will not be granted directly to the Official Custodian. The lease is vested in the Official Custodian by Order of the Charity Commission (if this recommended option is chosen) only after it has been entered into by the holding trustees or the custodian trustee (as appropriate).

2.11 Holding trustees are selected and appointed by the charity trustees and are thus subject to the control of the charity trustees. Community Matters’ Model Constitution for a community association clarifies this position.

2.12 From the perspective of the holding trustees and the charity trustees, any potential liability must be limited to the value of the community association’s assets. Further personal liability, i.e. any attempt by the landlord to seek compensation from personal assets, should be excluded. The reason is that the charity trustees act in a voluntary capacity, they do not make any financial gain and their personal assets should not put on the line in this way.

2.13 The position of the holding trustees in relation to the community association should be set out in a separate trust deed. A specimen is contained in Appendix 2.

23 2.14 It is the charity trustees who are responsible for the proper day to day policy of the charity and the management of the terms and conditions of the lease. It is the charity trustees that accept full responsibility for the operation of the lease and for the compliance by the community association with the terms and conditions of the lease (subject to the above-mentioned limit on their liability). This is the model used for Community Matters’ specimen lease, which it is recommended to landlords generally (see Appendix 1). ACRE also specifies this in its model lease.

2.15 Community Matters is aware of many cases where these separate responsibilities have become mixed up, resulting in the ‘hierarchy problem’ already referred to. These involve the dabbling or direct intervention by holding trustees in the general management of the community association with the attendant assumption of superiority (or the right of veto) in decision making. This can be a problem where a management agreement is entered into at the same time as the lease. It is advisable to keep these as separate as possible.

THE INCORPORATED COMMUNITY ASSOCIATION

2.16 One of the advantages of being a corporate body is that it can hold title to property in its own name without having to appoint holding trustees or to vest title to the property in the Official Custodian. Whilst this might be taken by some as the stimulus for incorporating an unincorporated association, it should be treated with caution. Many landlords, particularly private landlords, will often require named individuals to stand as guarantors for the covenants undertaken by an incorporated community association under a lease. A guarantor will have to assume responsibility directly to the landlord in the event that the community association fails to comply with its obligations under the lease. This may, at first sight, not be viewed as a problem particularly where only a peppercorn or nominal rent is paid. However, the guarantor will also assume liability for such matters as, say, failure to carry out repairs and redecorations which, in a full repairing lease, can be substantial.

2.17 There are four corporate vehicles available to a community association:

 company limited by guarantee: this has for many years been the most suitable corporate vehicle for a charity. However, the charitable incorporated organisation (see below) will in most cases from now on be the model of choice.  charitable incorporated organisation (CIO): at the time these guidelines went to press the draft legislation has been revised in committee and is to be considered further by Parliament. In short, this new type of corporate body will be the model of choice for most charities. This is because the CIO will have all the benefits of corporate status but be accountable to the Charity Commission rather than the Registrar of Companies.  Industrial and Provident Society: this type of corporate body has been used by charitable bodies in the past but in the community association sector it is now used mainly for the running of bar operations  Community interest company (CIC): this model is a new type of company for social enterprises (i.e. businesses that use their profits for community or public interest). They will offer the certainty and flexibility of the current company form, but with an ‘asset lock’ to ensure that assets are used for the community interest not public gain. They will not be allowed charitable status, and will not get the tax breaks enjoyed by charities, though they will face fewer legal restrictions.

24 2.18 This is not the place to go into incorporation in detail. The question of whether or not to incorporate is a matter of ‘horses for courses’ and Community Matters’ Information Sheet No. 14 ‘Incorporation and community associations’ deals with this issue in detail.

25 Chapter 3 CHARITY LAW REQUIREMENTS AND EXPECTATIONS OF THE CHARITY COMMISSION

This chapter looks at some specific charity law issues relating to the holding of property and corrects a number of misconceptions. It also explains what the Charity Commission expects from charity trustees.

The Charity Commission has helped prepare this chapter as part of its support for initiatives designed to provide accurate advice, information and guidance to charities.

What the law says

3.1 The Trustee Act 2000 gives all charities the legal power to acquire property, and to maintain and insure it. The property can be held as an investment or for the purpose of carrying out the charity’s objects (or even a combination of both). Other than that, there is no law that applies specifically to the acquisition of land by charities. Many charities also have a similar power in their governing document. The purchase can be at market value or for a lesser sum. It can be freehold or leasehold. In exercising this power trustees must act in a prudent and conscientious manner. In particular, they must

 always act in the best interests of the charity and in accordance with the charity’s objects and powers  in any transaction secure the best terms reasonably obtainable  take professional advice on matters which require it  protect the present and future value and integrity of the charity’s assets

3.2 The law expects trustees to use all the personal knowledge, intelligence and skill they possess when carrying out their duties. This is called the “duty of care”. If a trustee has special expertise that is relevant to a transaction (or any other action), he or she must use it to the full for the charity's benefit. If the trustee’s conduct falls below this standard, the law will judge him or her more strictly than a trustee who is unqualified.

Holding the property

3.3 Charity law does not lay down any rules about who can hold property on behalf of a charity. But the charity’s governing document may well say how it is to be done in the case of that charity. If it does, those directions must be followed. Chapter 2 explains the ways in which property should be held and managed.

3.4 Charity property can be put into the name of the Official Custodian for Charities. This is not obligatory but it is a Community Matters and ACRE recommendation (see Chapter 2). The law allows property to be vested in the Official Custodian even though a charity’s constitution says it must be in the name of holding trustees.

26 Duty to secure best terms

Charity trustees have the freedom and the duty to decide what accommodation is needed and what the charity can afford to pay for it.

3.5 Their aim must be to obtain the best possible deal for the charity. This is the trustees’ responsibility in law. Within the charity’s resources they must do whatever is necessary to achieve this end. This can include, for instance, negotiating the most favourable rent for a property held on lease or licence. Charities do not have any special rights or privileges in acquiring land, except for relief from stamp duty land tax on legal documents.

Consulting a surveyor

Charity trustees should take advice from an independent surveyor if they are thinking of taking on premises where they would be legally responsible for repair and maintenance.

3.6 The person they consult should have qualifications from either the Royal Institution of Chartered Surveyors or the Incorporated Society of Valuers and Auctioneers (the only bodies in this field which set standards for the competence of their members, or which require them to have professional liability insurance).

3.7 The surveyor should report to the charity trustees on the condition of the property, its suitability for the intended purpose and the price, rent or other consideration which the charity will be required to give. He or she can also advise about what covenants should be imposed for the maintenance of the property, and on which party the different obligations ought to fall.

3.8 The duty to take advice still applies where, for example, the charity will be responsible for the maintenance of the building under a licence. If the charity cannot afford to employ a surveyor in those circumstance, the charity trustees should seek out someone who is competent to look the building over (e.g., a builder).

Using a solicitor’s services

The charity trustees should have expert legal advice on the lease or licence.

3.9 Community Matters can obtain legal advice on leases and licences for its members. It is sensible for a charity to have its lease examined by a solicitor before it enters into the lease in order to protect the charity’s interests. It is particularly important to do this in the case of a lease for a term exceeding 7 years. Although this has cost implications for the organisation, it is unlikely that the charity trustees will have the knowledge and skills necessary for dealing with the technical and legal aspects of taking a lease, namely-

27  the wording of the lease and the negotiation of the terms and conditions  conducting relevant searches of the local authority and the Land Registry  dealing with the Inland Revenue on stamp duty land tax, and  the registration of the lease with the Land Registry.

3.10 Charity trustees should try to choose a solicitor who understands at least the basics of charity law and the position of the charity as an independent, self-governing organisation. This is important because, for one thing, it is not unknown for landlords to try to use the lease to impose a measure of control over the operation of the charity itself (and not just of its use of the building).

3.11 Explain to the solicitor at the outset what kind of organisation the charity is, what it does and how it functions. Make clear what the charity expects from the lease. Remember that the solicitor is working for the charity and should be representing the charity’s interests. Bear in mind, too, that he or she needs proper written instructions. Charity trustees should also keep a check on the progress of the work, and satisfy themselves that the final outcome is what they wanted.

3.12 Charity trustees cannot be held responsible for any lack of professional competence on the part of the solicitor or surveyor. But they are under a duty adequately to instruct them and monitor their work, as described above.

Protection for the charity and the trustees

Professional advice is not an optional extra. It is a vital aid to the charity trustees in protecting the charity’s assets and its future.

3.13 In addition the charity trustees will be shielding themselves from personal liability should anything go badly wrong which results in claims of negligence or foolhardiness being made against them.

Simply accepting the assurances of the landlord as to the condition of the property is not sufficient.

3.14 The charity trustees might be leaving themselves open to accusations of being negligent when they took on the property should the state of the building prove to be ruinously expensive for the charity. Similarly they should not rely on the word of the landlord’s solicitor that there is nothing in the lease or the licence that need worry them.

28 Sharing the property

3.15 It is increasingly common for a public body to make it a condition of granting a lease to a charity that the property, or part of it, be shared by another organisation. The other body may or may not be a charity. Even if it is a charity, its purposes may well be different from those of the tenant charity. In these circumstances the charity must ensure as far as possible that it is able to control the property costs relating to its own occupation, i.e. separate meters for gas, electricity and water, and that, if costs for the whole of the property have to be apportioned, a reasonable basis for doing so is laid down in the lease.

3.16 Accepting a lease subject to such a condition or restriction is not against charity law. It is not a breach of trust, nor does it endanger the organisation’s charitable status. The explanation for this is that the condition has been imposed by the owner of the property: it is not (in most instances) the wish of the charity. The charity may be faced with the choice of sharing the building, or not having it at all. It would be different if the entire property had been under the charity’s control, and the charity trustees had voluntarily given up part of it. (See paragraph 3.25 in regard to letting or hiring out.)

3.17 What the charity trustees must make sure of is that, when their charity is using the premises, it carries out its proper activities.

Charity trustees must resist any attempt by the landlord to induce the charity to do things which are not covered by its objects.

Wasting asset

3.18 By its nature a lease is a wasting asset. Eventually it will come to an end and the property will revert to the freeholder. The property includes the land, any buildings on it and any fixtures and fittings which the lease says belong to the landlord. This includes the position where land is leased to a charity and the charity pays for any development on it. However, if the lease cannot be renewed for whatever reason, the charity stands to lose not only the use of the premises but also, in a manner of speaking, the money it has put into it by the way of development, maintenance and improvements. This is why it is important to obtain as long a lease as possible.

Spending a lot of money on something from which the charity will receive no long-term benefit can be bad business. It could also lay the charity trustees open to charges of wasting the charity’s money

3.19 However, there is no law against spending charity money on leasehold property. Indeed, unless the landlord is exceptionally generous some money will have to be laid out if only on day- to-day expenses. Nevertheless, where major sums are involved charity trustees must have regard to the length of the lease and the prospects of renewing it and make a judgement about whether it is prudent to spend the money. Professional advice should be sought where appropriate.

29 Fixtures, fittings and equipment

3.20 The same kind of considerations as are outlined in paragraphs 3.9 to 3.14 should apply to any equipment and fittings which the charity provides for the building. It is important before signing a licence or lease that both sides are clear about who is responsible for providing what. Equally important is what happens to such items if and when the charity no longer has use of the premises. Ideally the charity should be able to remove everything which it has provided when it vacates. Even if they cannot all be used, the surplus items can perhaps be sold. By saving all that they can for the charity the charity trustees are helping to fulfil their legal duty towards the charity.

Sinking fund

3.21 A sinking-fund is a way of off-setting the kind of loss described in paragraphs 3.18 and 3.19. The charity pays in whatever it can afford and invests it. Income from the investments is also invested. Over the years, generally the length of the lease, a nest-egg is built up which will help to compensate for the loss of the premises and will help the charity to continue elsewhere.

Permanent endowment

3.22 In the ordinary way the law does not oblige charity trustees to set up a sinking fund. The only time they might have to do so is when they want to spend money which is classified as “permanent endowment”. This is money or other assets which have to be preserved indefinitely.

3.23 Community charities are not likely to possess a permanent endowment: the typical constitution makes all the charity’s assets expendable. There may be the odd instance where money has been left or given to the charity with a restriction of this sort attached to it. Contact the Charity Commission before spending money which is thought to be permanent endowment. The Commission will advise whether the money can be used and, if so, whether it will have to be replaced through a sinking fund.

Hiring, sub-letting, and mortgaging

Hiring the premises out for commercial activities when they are not needed for charitable purposes is a useful way of raising money. It also fulfils the charity trustees’ legal duty to maximise the charity’s assets.

3.24 If the charity’s work involves hiring out space to other organisations, it must make sure that there is nothing in the lease to prevent that being done. When negotiating a lease, charity trustees should try to secure the right to hire out for commercial purposes (see Chapter 4). Charities should be aware, however, that where it hires out space to another organisation on such a basis that the organisation effectively has exclusive use of that space, it could amount to a sub- letting in which case different considerations apply. It should be noted that the hiring out of community centre space to a commercial, non-charitable organisation should only happen at times and to the extent that the building or space is not being used for charitable purposes. If a charity continues to make commercial rate hirings (perhaps because it ensures a healthy flow of

30 funds) which results in space being denied to a user falling within the charity's objects, then the charity trustees will be acting in breach of trust.

3.25 A charity might find that it has no need of a particular part of the property and would like to sub-let it on a permanent basis. In the case of community associations, the running of a bar or other trading activity may require the granting of an occupational licence. Many leases place a complete prohibition on this.

3.26 However, charity trustees should be aware that the Charities Act 1993 (s.36) lays down a procedure which must be followed before letting or sub-letting. This procedure includes the obtaining of a surveyor’s report and advertising for a tenant unless the surveyor indicates otherwise. These requirements are less stringent if the letting or sub-letting is for less than 7 years.

3.27 Similarly, if the charity’s lease is to be mortgaged as security for a loan, there is a statutory process to be gone through (Charities Act 1993, s.38).

31 Chapter 4 CONTENTS OF A LEASE AND NEGOTIATING TERMS

This chapter explains the processes involved in taking a lease or a licence and guides charity trustees on essential items that should be covered, or changed, in any lease presented by the landlord

4.1 Before considering in detail what ought to be contained in a lease, there are two important subjects that need explaining: the constitution of the community association and its relationship to the lease; and the offer of a lease.

THE CONSTITUTION OF THE COMMUNITY ASSOCIATION AND ITS RELATIONSHIP TO THE LEASE

4.2 Where a community association has vested title to property in some or all of its charity trustees, the community association must arrange either for the lease to be assigned to holding trustees or for the title to the lease to be vested in the Official Custodian (see Chapter 2). If the lease prohibits an assignment then the consent of the landlord will have to be obtained: a costly and time consuming business.

4.3 It is important that the community association’s constitution is clear on the right of the charity trustees to appoint and remove holding trustees, and that this is reflected in the lease itself. This is often misunderstood by both the community association and the landlord concerned. There can be no hierarchy of responsibility between the charity trustees and the holding trustees: each has separate responsibility.

4.4 Some landlords have required the constitution of the community association to be incorporated in the lease by way of a Schedule, usually on a start-up of a community centre. If the community association already has a constitution then, in theory, this could result in a second charity being established in error. The community association’s constitution should not be included in the lease or licence for two principal reasons:

1) The constitution of an independent community association should not be the concern of the landlord. A charity is accountable through its constitution to its members and to the Charity Commission but not to the landlord. It is responsible to the landlord, but only under the terms of the lease for its occupancy of the building. The charitable objects of the community association are wider than simply managing a community centre and this is sometimes misunderstood by landlords who attempt to interfere in the running of the community association.

2) Once its constitution is in a lease it is difficult to change it; indeed, the lease may specifically forbid it without the landlord’s consent.

32 OFFER OF A LEASE

4.5 There can be no such thing as a standard lease: each situation demands a consideration of unique issues that demand their own terms and conditions. Nevertheless, there are a number of provisions that are crucial for charitable community associations. The specimen form of lease set out in Appendix 1 contains these provisions together with a selection of terms and conditions that reasonably reflect the balance of interests between the landlord and the community association. The terms and conditions themselves are briefly explained on the page opposite to each term.

Make representations as early as possible in the process

4.6 If it is feasible, as soon as the landlord discusses the possibility of a lease, the community association should present the specimen lease to the proposed landlord as a specimen which has been prepared by Community Matters specifically to cover the unique position of community associations. Even if the landlord insists on its own form of lease, it is useful to point out the clauses that are of particular importance. The explanatory notes can be brought to the attention of the landlord. It may assist the community association to seek the help of a Local Federation Organisation or other local grouping, or a Community Matters consultant.

4.7 Community associations involved in the development of community facilities as part of new building development in their area should be aware of the use of what are known as Section 106 Planning Agreements. Section 106 of the Town and Country Planning Act 1990 enables the developer and the local authority to secure community infrastructure to meet the needs of residents in new developments and/or to mitigate the impact of new developments upon existing community facilities. It is common for s.106 agreements to place the responsibility on the developer to build a new community centre thereby securing planning gain as part of the local authority’s approval of the proposed development plans. It is very important that the community association concerned attempts to influence the content of such agreements (and thus the detail of the community building), and the best way of achieving this is to become involved in the planning application at the earliest possible opportunity.

4.8 The Charity Commission would expect a community association to take independent advice on negotiating a lease (this could be from Community Matters itself). The community association must not rely on the landlord’s legal advisers to provide advice. They can only act in the interests of their client landlord.

4.9 As mentioned in Chapter 2, paragraph 2.12, the liability of the holding trustees and of the charity trustees should be limited to the value of the assets of the community association and exclude personal liability. The constitution should provide for an indemnity out of the assets of the community association for the charity trustees and holding trustees of the property for liabilities arising out of holding the property.

4.10 The lease should provide that, whilst the title is held by holding trustees or vested in the Official Custodian, the management and control of the property shall be the responsibility of the charity trustees.

SPECIFIC TERMS OF LEASE OR LICENCE

33 The following paragraphs are designed to guide charity trustees through the negotiation of a lease. However, most of these items will also be covered in a licence, although perhaps to a lesser extent, so what follows can be read for licences as well.

Length of lease or licence

4.11 Local community-based charities are facing reduced funding and rents that are no longer nominal in amount, so they need to pursue grants independently for projects and activities. A strong argument should be used with landlords that leases in excess of 10 years will often be essential to conform with grant making agencies’ requirements for security of tenure. ACRE recommends a minimum of 28 years with an option to renew for a further 28 years.

Community Matters recommend a lease with as long a term as possible even though this can represent a substantial commitment. The Charity Commission and many funding bodies will probably require this where the community association intends to invest money in the development or renovation of the building.

4.12 Where a local authority is the landlord, it is empowered to offer a lease of more than 7 years at a less than commercial rent to a charity where the premises are to be used for recreational purposes (which is normally the case for a community building). Some local authorities do not realise that this power is available. There is a great deal of confusion in this area: it has arisen due to the increasingly complex web of regulations made under local government legislation over the years. The Local Government Act 1972 Section 123 gave local authorities a restricted power to dispose of land for up to seven years on whatever terms the local authority wishes including rent free periods and short term leases. However, local authorities are permitted to grant leases for longer terms under two authorities:

 section 19 of the Local Government (Miscellaneous Provisions) Act 1976 gives local authorities, including parish and community councils, power to grant long leases for less than the best consideration with regard to recreational facilities. The definition of recreational is very wide and would include community centres as well as, for example, day centres for the elderly. The effect of the 1976 Act is that local authorities are in the same position as they were under section 4(1) of the Physical Training & Recreation Act 1937, which allowed local authorities to build, equip and maintain sites for use of clubs, societies or organisations having social or educational objects, and to let such sites at nominal rent;

 the Department of the Environment, Transport and the Regions has, under powers contained in section 128 of the Local Government Act 1972, issued (as of August 2003) a general disposal consent to enable local authorities dispose of land for less than the best consideration that can reasonably be obtained. The terms of the Consent mean that specific consent is not required for the disposal of any interest in land which the authority considers will help it to secure the promotion or improvement of the economic, social or environmental well-being of its area. Where applicable, authorities should also have regard to their community strategy. Although these criteria derive from the Local Government Act 2000, their use in the Consent is not confined to authorities with duties and powers under that Act. Therefore, authorities not covered by the 2000 Act can also

34 rely upon the well-being criteria when considering disposals at less than best consideration. It will be for the authority to decide whether these decisions taken comply with any other relevant governing legislation. In all cases, disposal at less than best consideration is subject to the condition that the undervalue does not exceed £2,000,000 (two million pounds).

Assignment and sub-letting of lease or licence

4.13 Assignment is the means by which the lease or licence is transferred to another tenant (e.g. to a company where the community association decides to incorporate itself). Sub-letting is where the community association lets part of the community building to a third party (e.g. a bar company). It is usual for leases to community associations to forbid any assignment: this is acceptable in principle but the lease must allow, first, for an assignment to new holding trustees (where this applies) or to a new corporate charity on the incorporation of an unincorporated community association and, second, for the vesting of the title to the lease in the Official Custodian. It is important for community associations that an absolute prohibition against sub- letting or sharing of possession of the building be resisted. This is particularly so where community associations operate a bar or a community café which have to be hived off to a separate company. See the specimen lease, clauses 3.8 and 5.

Parties

4.14 There should be two parties: the landlord and the holding trustees (or custodian trustee). The holding trustees (or custodian trustee) must be referred to as holding the lease or licence on trust for the community association and its charity trustees and that their obligations should be read as applying to the community association itself and to its charity trustees. See the specimen lease, clause 1.2.

Obligations for repairs, maintenance, insurance etc.

4.15 The best arrangements are for the landlord to be responsible for the exterior and structure of the building and the community association responsible for the interior and fixtures and fittings (this is the basis of the specimen lease). In some cases, the local authority will expect the community association to assume responsibility for the repair of the whole building, not just the interior. There is no technical or legal reason why the community association should not accept such responsibility but it should only do so where the rent is substantially discounted or reduced to a peppercorn. The argument in favour of this is that, as a charity, the community association is in a strong position (hopefully) to access major grant-aid for the repair or development of the building: the landlord should accordingly not prevent such repair or development by charging a market rent. The same goes for insurance: if the landlord makes substantial charges for occupancy then insurance premiums should be included in the rent and not charged as a separate item.

4.16 Some local authorities are considering not insuring some buildings because of the high cost involved. It seems it is cheaper for them to risk having to replace one or two buildings rather than insure them all. Whether the local authority insures or not, the community association should ensure that the lease contains a full reinstatement obligation on the part of the landlord.

Rent levels and reviews

35 Community Matters recommends that only a peppercorn or a nominal rent, say £2 a year, is paid. This recognises the charitable status of the community association and the valuable community development work it undertakes for the benefit of the local authority and the community at large. The trade-off may be the acceptance by the community association of a full repairing obligation.

4.17 If the local authority demands a market or otherwise substantial rent, the community association should ask why. The local authority response may be that this is its policy, i.e. it charges rent to all its tenants, commercial or otherwise. If this is the case, the community association should argue that the charging of a market rent fails to recognise the partnership between the local authority and the association in providing community-related services. It is usual for rent to be charged to a commercial body but the community association is run by volunteers who have enough difficulty raising funds for its work never mind paying substantial rent. The local authority may say that it is bound to charge a rent by law. In this case, the community association should point the local authority to paragraph 4.12 above.

4.18 If the landlord charges only a peppercorn or nominal rent then there will be no need for rent reviews. If the landlord charges a market rent, the timing and method of review must be agreed as part of the lease. It is advisable to seek professional advice on the basis and wording of the rent review provisions.

Community Matters recommends that where a market rent is subject to review or the landlord reserves the right to review repairs and decorations and to call for improvements on a regular basis, the lease includes an option for the community association to terminate the lease. Some funding bodies have been known to object if rents are set so high or liabilities arise in the future that they put at risk the long-term viability of the charity.

4.19 Community associations must beware of falling into the trap of taking on a lease at a market rent in circumstances where the local authority has promised to fund the rent, perhaps as part of its grant aid. Unlike the rent which must be paid each year of the term of the lease, the local authority may reduce or withdraw that part of the grant aid relating to rent.

Limit to liability

4.20 If the landlord will agree, the liability of the holding trustees should be limited to the value of the assets of the community association and personal liability should be excluded. Ideally, the liability of the charity trustees should be so limited but this may be harder to achieve. See the specimen lease, clause 10.

4.21 Local authorities that are serious about supporting community associations and want volunteers to take responsibility for a community building need to consider this issue of limited

36 liability carefully and be reasonable about the amount of personal liability that they place on such volunteers.

4.22 Occasionally a local authority may seek to avoid any limitation on liability expressed in the lease by requiring an unincorporated community association to incorporate as a company limited by guarantee or as an Industrial and Provident Society. This may well be wholly inappropriate for a small community association as this would make the volunteers’ job even more complex by having to comply with company law as well as charity law (see Chapter 2, paragraphs 2.16 and 2.17).

4.23 If the landlord will not agree to any limit of liability then the charity trustees should consider the options available to them to reduce any possible exposure. The first things that all charity trustees should think about are good management practice and effective procedures for dealing with day to day problems of occupying community buildings. There is really no substitute for this: it enables charity trustees to place themselves in the best position to avoid any liability arising in the first place.

Restrictive covenants

4.24 The lease should not include unnecessary restrictive covenants. Whilst it is reasonable for a landlord to ensure that premises are not used for illegal or immoral purposes, once the landlord has agreed that the premises may be used for community purposes then any further control should be resisted (see paragraph 4.33 below).

Community Matters recommends that whilst it is important for any degree of partnership between the Local Authority as landlord and the community association to be reflected in the lease, it is essential that the independence and autonomy of the community association is maintained.

Sub-letting and hiring

4.26 If a community association has or intends to have a social club then it must ensure that the lease permits the sub-letting or licensing of part of the building for such purposes. A total ban on sub-letting or licensing could prevent the community association from carrying on other forms of activity, such as a trading operation, which would require the occupation of a separate part of the building. A ban could also seriously affect the community association’s ability to fund-raise by hiring out rooms on a commercial basis. Where a community association is able to negotiate a relaxation of any prohibition against sub-letting, it should seek to ensure that the landlord does not use this as a pretext for increasing the rent for the whole property: as previously mentioned, sub-letting or hiring is a suitable method for charities to raise funds for their charitable work and any consequential increase in rent will effectively cause a reduction in such charitable work.

4.27 If the lease requires a community association to conform to a specific lettings or hiring policy which includes a non-discrimination requirement, the community association must protect itself against breaching such requirement by putting appropriate procedures in place.

Break clause

37 4.28 The idea of a break clause is made in the box under paragraph 4.18, but it is important that the community association has a general right to terminate the lease on notice at any time. This is because the future is unknown: the community association may be operating well at the time of the lease being granted, with new blood continually coming on to the management committee, but this may not necessarily always be the case. Where a community association has become moribund it is unfair for a landlord to expect volunteers to continue to have liability under a lease, e.g. for repairs. See clause 6 of the specimen lease.

Reserved use of building by the local authority

4.29 The reserved use of community premises for, say, a polling station would be acceptable. This should be subject to suitable notice and payment of an appropriate fee by the local authority, or otherwise the number and duration of any free use should be spelled out in detail in the lease. Any retention by the landlord to let parts of the building to anyone else must not conflict with or detract from the charitable activities of the community association.

WHAT THE LEASE SHOULD NOT CONTAIN

Changes to the constitution

4.30 The local authority as landlord may have a community development policy which requires that community buildings be ‘open to all’. The normal membership structures adopted by community associations can confuse local authorities into believing that such structures are designed to be exclusive, i.e. that not all members of the public are entitled to use the community building and facilities. This is not the case. Membership structure is not synonymous with closed access and any suggestion that the community association’s constitution be changed would be wrong. The constitution of a community association is designed to give all members of the public in the area of benefit the right to membership: that some people decide not to become members does not prevent them from using the community building and its facilities.

4.31 The landlord should not seek to have a right of veto over any changes to the constitution: if the landlord is concerned about the use to which the community building is put then the lease, licence or management agreement is the correct place for dealing with this.

Representative of the local authority on the management committee

4.32 The local authority as landlord might wish to appoint a representative to sit on the management committee of the community association. This is provided for in Community Matters’ Model Constitution and this wording should be used where a community association’s constitution does not include the power. It is not good practice to insert such right in the lease or licence. This is a constitutional issue and constitutional issues should not be covered in a lease or licence. The landlord should be aware that its employee or, perhaps, one of its councillors sitting and voting on a management committee of a charity is a charity trustee and, as such, is required under charity law to act in the interests of the charity at all times. Thus, the landlord should not expect its representative to represent its views to the exclusion of the interests of the charity. The individual concerned can find him or herself in a potentially invidious position of acting in accordance with their local authority’s instructions or policy whilst having to bear the duties and responsibilities of a charity trustee.

38 As an alternative, the local authority may, with the consent of the management committee, appoint a representative simply to attend management committee meetings as a non-voting observer

Unreasonable restrictive covenants

4.33 The examples given below can, in Community Matters’ experience, give local authorities as landlords problems particularly where the local authority has experience of mismanagement by other organisations. There are two parties to a lease or licence and so a balance should be struck between safeguarding the landlord’s interest and allowing the community association reasonable freedom to carry out its charitable purposes.

 Prohibition against bingo being played for more than a number of times a week. This may be designed to prevent big-scale bingo but it could prevent small bingo being played by a succession of small groups who use the centre, for example, senior citizens at their regular sessions;  a total prohibition on gaming will exclude otherwise acceptable activities such as lotteries, raffles, jackpot fruit machine and horse race night. In view of recent relaxation in the gaming and lottery legislation, it could be unreasonable for the landlord to insist on a blanket prohibition;  prohibition against notices, posters and advertising. There should not be a total ban on legitimate situations. For example, where a community association has a free notice board for advertising community events. A landlord should explain why there is a prohibition of specific items;  restrictions on hiring of rooms to commercial organisations and for auctions: charities need to raise funds to finance their charitable activities and, provided its dealings with commercial organisations and auctions are only a small percentage of its activities and do not restrict charity/community use, the Charity Commission is unlikely to object. Community associations would be expected to charge commercial hirers a commercial hire fee. Thus, there is no substantive reason why the local authority should object.

ADDITIONAL PROBLEM AREAS

4.34 Rates

A charity which occupies property wholly or mainly for charitable purposes is entitled to 80% relief from Uniform Business Rate by virtue of Section 43(5) of the Local Government Finance Act 1988. This is known as ‘mandatory relief’. By Section 47 of the same Act, a local authority may, in its discretion, award up to a further 20% discretionary relief. Community Matters requests local authorities generally to reconsider the discretionary rate relief for community associations where no discretionary awards have been made. Local charities should be considered on the merit of their case for rate relief not by blanket policies or by reference to their receipt of mandatory relief which is drawn from the ‘Unified Business Pool’ and therefore not a charge directly on local council tax payers. Community associations should note that application to the local authority for discretionary relief must made each year.

39 Chapter 5 ASSET TRANSFER

This chapter is a brief guide that explains the policy and practice relating to asset transfer. It highlights some of the problems associated with asset transfer and the problems identified with asset management in local authorities

5.1 There are a number of organisations occupying community premises formerly owned by the local authority who have taken over the ownership as well as the management of the building.

5.2 The Local Government Act 1972: The General Disposal Consent (England) 2003 has given local authorities considerable freedom to dispose of land at less than the best price and grant a lease in excess of seven years where the authority considers it will help it to secure the promotion or improvement of the economic, social or environmental well-being of its area

5.3 Organisations that want to know about community assets and their availability for transfer have often found great difficulty in finding the right person to approach within the local authority. Conflicting advice is often received between departments. At worst information about council properties is fragmented within the council, with no strategic management plans about the condition or use/future use of buildings

5.4 How the local authority approaches the transferring of assets to the community has been highlighted by reports from the DETR in 19991 and The Audit Commission publication "Hot Property getting the best from local authority assets” published in April 2000.

5.5 The findings of the DETR report highlighted that there was no consistent structure for asset management planning across authorities and there was no consistent approach to the categorisation of land and property assets across local authorities. This resulted in limited authority-wide strategic asset management and limited performance measurement being undertaken.

5.6 This weakness in local government was reinforced by the Audit Commission publication that stated that sound asset management plays a central role in delivering best value.

5.7 The Audit Commission’s in-depth field work in ten authorities and visits to two others identified what needs to happen at a national and local level to ensure that councils are making the best use of assets based on current and future needs

Some of the problems they identified with asset management in local authorities

1 DTZ Pieda Consulting: Measuring performance in the management of Local Authority Property September 1999

40 5.8  Poorly defined managerial and financial procedures has led to lack of transparency and accountability for property  Property is not always treated as a strategic resource  There is insufficient data to inform decisions about how best to manage the property  Some councils are politically apathetic and oppose changes in the status quo  Lack of challenges as to why they own some land and property that is non operational

5.9 The Audit Commission suggested a range of detailed solutions designed to make local authorities take a more strategic approach to their buildings.

Recent requirements of Government

5.10 The majority of capital funding that councils receive is now distributed from central government through a process known as the Single Capital Pot. The process was introduced in 2003 and allows for distributing support for local authorities’ capital programme.

5.11 Local authorities are at various stages in making clear to communities how they will approach asset transfer.

5.12 Some local authorities have long recognised the valuable contribution of multi- purpose community organisations, community owned and not for profit businesses, local self-help groups and development Trusts and other social economy organisations. In doing so a handful of local authorities have begun to assess the need within the community and voluntary sector for asset transfer and relevant transactions as part of the business and organisations development

5.13 In approaching the local authority about acquiring the ownership of the building it is essential to consider objectively the framework within which an organisation can acquire a community building (or how an asset can be transferred). Below are explanations of the asset management framework

How are Capital Strategies/Asset Management and Asset Management Plans defined?

5.14 Capital Strategies – the Capital Strategy is a strategy that sets out the Council’s priorities for capital investment and how it will evaluate new projects for inclusion in the Capital Programme. It should highlight priorities and targets within the council that:

 Link capital investment to the achievement of the local authority’s objectives  Describes how the deployment of a capital resource will assist in the achievement of the Councils goals  Brings together the capital consequence of the local authority’s policy, including the key objectives and the community plan  Explain approaches to prioritising investment  Explain how the local authority will monitor and evaluate the process

5.15 Asset Management is about getting the best out of local authority land and buildings to ensure value for money and the delivery of accessible high quality services, how the

41 council manages property they own and what they plan to do to ensure that property is managed properly in order for it to contribute to strategic plans.

5.16 Asset Management Plans are the local authority plans relating to assets. The plans should:  give an understanding of the physical assets through stock condition survey and valuations  understand the need through demand/need and demography assessments  serve to review whether assets are delivering benefits in relation to capital and cost.  provide a consistent approach to the categorisation of land.

Using the Provisions of the General Consent Act

5.17 Community Matters advises that organisations wishing to use the provisions of the General Disposal Consent (England) to transfer a council building to community ownership develop a positive relationship with the local authority and consider potential partners for the provision of services. Organisations should also ensure that they have or know the following information:

 Who the Corporate Property Officer is or any other official within the council with responsibility for the authorities Assets Management Plan.  Whether there is specific reference in the Asset Management Plan about how decisions to dispose of land at a consideration which is less than the best price reasonably obtainable will be taken.  Information needed for the authority to make a balanced judgement of the merits of such disposals.  What is the description of the property.  What benefits will accrue or what the anticipated benefit to the well-being of the area or its population will be should the transfer happen.  How the anticipated benefits fit with policy and objective of the council as a whole.  Methods for evaluating the delivery of anticipated benefit.

Are you acquiring an asset or a liability?

5.18 For an organisation to be able to answer the question as to whether a building will be an asset or a liability depends on an assessment of the condition of the building and its potential to help them create income through trading and other activities. Where capital investment is required, and maintenance cost will increase running costs of the building, governing bodies of community organisations need to weigh up whether or not it is viable to repair and make the building fit for purpose against the anticipated social and financial benefits.

42 The survey stage

5.19 Community Matters advises that organisation get an independent condition survey carried out on the building that they propose to acquire. The survey should be a comprehensive document including at least the following:

Elements of the Survey report What should be included

Summary Sheet Name and address of the property. Other factual information

Narrative overview of the Overview of the condition of the property highlighting condition on the property points of particular importance

Condition needs on particular As well as the overall structure of the building the report areas should contain specific reference to  Roofs  Ceiling  External walls indoors and doors  Internal walls and doors  Electrical services  Mechanical services  Decoration  Fixed furniture and equipment  External areas  Playing fields (if relevant)  Stairs  Disabled access

Schedule of identified work/  Prioritising the work to be done Maintenance backlog  The estimated costs  The necessity of the work  The Consequences of not doing the work

Risk Assessment  Any risk associated with Health & Safety

5.20 In addition to the conditional survey, an accompanying business plan will need to be produced

5.21 For more information on acquiring assets see further reading (in chapter 6).

43 Chapter 6 SUMMARY AND SOURCES OF FURTHER ASSISTANCE

These guidelines have attempted to set the agenda for landlords and community associations when consideration is given to the occupation of community buildings by community associations. Good practice in this area is continually developing and Community Matters and ACRE will continue to provide advice as and when necessary. A summary of good practice recommended in this book is set out on page [41]. Some sources of further reading are listed below:

FURTHER READING

Charity Commission leaflets, available from the Charity Commission office (see address on page 40):

 Responsibilities of Charity trustees (CC3)  Acquiring Land (CC33)  Disposing of Charity Land (CC28)  The Official Custodian for Charities' Land Holding Service (CC13)  Small Charities (CC44)  Charities and Insurance (CC49)  Charities and trading (CC35)

Other publications:

 Insurance Guide for Voluntary Organisations. NCVO Publication  Voluntary But Not Amateur by Jackie Reason. LVSC Publication  The Voluntary Sector Legal Handbook. By Sandy Adirondack & James Sinclair Taylor. Directory of Social Change Publication  Asset Transfer: a can-do guide from the Development Trust Association  developing an asset-base from the Development Trusts Association

Community Matters publications, available from Community Matters London Office (see address page 40)

 Managing Your Community Building (3rd edition)  Model Constitution for a Community Association

Information Sheets:

No. 8 Model trust deed and Conveyance for a community centre No. 12A Health and Safety in community buildings No. 12B Fire Safety Regulations and Checklist for Community Centres No. 14 Incorporation and community associations No. 15 Rates No. 23 Charities Acts 1993 and 1993 No. 5 Disqualified or not? - a guide to the law on the disqualification of trustees No. 61 Rules and hire agreement for a community centre

44 No. 62 Community buildings and Taxation No..63 Community buildings and utility charges No. 70 Community association trustees No. 84 Occasional Permissions No. 86 Trading and Community Associations

ACRE publications, available form ACRE offices (see addresses below):

 Plan, Design and Build by Alan Wilkinson  Model Rules for a Village Hall  Model Hiring Agreement for a Village Hall  Model Documents: (A) for Freehold Properties and (B) for Leasehold Properties  Managing Your Hall

USEFUL ADDRESSES

Action with Communities in Community Matters Rural England (ACRE) Head Office Somerford Court 12-20 Baron Street Somerford Road London, N1 9LL Cirencester Tel: 020 7837 7887 Glos. GL7 1YW Tel: 01285 653477

Charity Commission Community Trading Services Ltd 13-15 Bouverie Stret 12-20 Baron Street London, EC4Y 8DP London, N1 9LL Tel: 0870 333 0123 Tel: 020 7837 7887

2nd Floor Directory of Social Change 20 Kings Parade 24 Stephenson Way Queens Dock London, NW1 2DP Liverpool, L3 4DQ Tel: 020 7209 5151 Tel: 0870 333 0123

Woodfield House National Council for Voluntary Tangier Organisations (NCVO) Taunton 8 All Saints Street Somerset, TA1 4BL London, N1 9RL Tel: 0870 333 0123 Tel: 020 7713 6161

Centre for Accessible Environments Development Trust Association Nutmeg Houses 1st Floor, 9 Red Lion Court 60 Gainsford Street London London, SE1 2NY EC4A 3EF Tel: 020 7357 8182 Tel: 0845 458 8336

45 OCCUPYING COMMUNITY PREMISES: SUMMARY OF GOOD PRACTICE

Landlords should  understand the basic charitable status of community associations and the requirements of charity law and of the Charity Commission  acknowledge the problem of charity trustees taking a lease or licence in their own names, and ensure that holding trustees are selected and appointed by the charity trustees  be prepared to give consideration to Community Matters’ specimen lease and sample management agreement and, if possible, use these as the basis for their final documents  negotiate openly with community associations and not expect such bodies to sign the first document put in front of them  where it is the local authority, adopt and develop a community development policy on the basis of partnership with community associations and the local federation of community organisations  support community associations by: - granting long leases where applicable - charging nominal rent only - granting discretionary rate relief (where the landlord is the local authority)  not seek to control the charity’s constitution or activities otherwise than usually covered in a lease or licence

Community associations and their charity trustees should  familiarise themselves with the requirements of charity law and the Charity Commission concerning the entry into contractual arrangements for the occupation of property  understand their own constitutional framework and, unless the association is incorporated, the requirement for holding trustees  take as much professional advice as possible  use the specimen lease and sample management agreement (as applicable) as a tool for understanding lease contents and the negotiation process  bring to the landlord’s attention the need to address specific charity and community association issues  understand the fundamentals of security of tenure, the right to remain in occupation during the lease and the right to negotiate a new tenancy at the end of the original term  where relevant, combine with other community associations in the area to negotiate collectively with the landlord over the terms of the lease, licence and/or management agreement  observe Community Matters’ recommendations and, if in doubt, consult Community Matters who can advise as necessary  Where a lease in excess of 7 years is being granted, use the services of a solicitor.

46 47 Explanatory Notes

DATE: Insert the date on which the final signature is made to the lease and the parties exchange copies.

PARTIES: Full names and addresses to be inserted. The Lessees comprise those individuals, preferably not less than four, who are appointed by the management committee of the Association expressly for the purpose of holding the lease on behalf of the Association. The Lessees should not include any member of the management committee.

OPERATIVE PROVISIONS: These clauses set out the rights and obligations of the parties.

Definitions and interpretation: It is important that capitalised words used in the Lease have a specific, agreed meaning. It is essential for definitions to be as comprehensive as possible. If further agreed words or phrases are to be used in the Lease then they must be included and defined in this clause. Definitions should be descriptive and should not be used for contractual provisions, i.e. no operative provision should be included in the definition itself.

"the Association": The relevant details must be inserted here.

"the Association's Assets": This is included because of the requirement for the liability of both the Lessees and the Charity Trustees to be limited to the value of the Association's assets (see clause 10).

"the Constitution": This relates to the objects, rules and regulations of the Association as set out in its governing document(s).

48 Appendix 1 SPECIMEN LEASE

LEASE DATE: PARTIES: (1) [ ] Council of [ address ] (hereinafter called “the Council” which expression shall where the context so admits include the person for the time being entitled to the reversion immediately expectant on the term hereby granted) and (2) [ insert names and addresses of holding trustees ] (hereinafter together called “the Lessees” which expression shall where the context so admits include their successors in title and exclude persons who shall after the date hereof have ceased to hold the title to the Premises as a result of their replacement by the Association in accordance with the Constitution).

OPERATIVE PROVISIONS 1. Definitions and interpretation

1.1 In this Lease the following terms shall, except so far as the context otherwise requires, have the following meanings: “the Association” means the [ ] Community Association of [address], an unincorporated association and a registered charity (registration number [ ]), constituted in accordance with the provisions of a constitution duly adopted on [ ]; “the Association’s Assets” means all assets of the Association which are for the time being vested in the Charity Trustees as charity trustees of the Association; “the Constitution” means the said constitution of the Association and, in the case of the incorporation of the Association, its constitution or Memorandum and Articles of Association (as the case may be), all as subsequently amended from time to time in accordance with the provisions thereof;

49 "the Charity Trustees": These are the members/or the time being of the management committee of the Association.

"holding trustee": A descriptive term for each of the Lessees who has been appointed by the management committee of the Association expressly for the purpose of holding the Lease on behalf of the Association.

"the Lessees' obligations: This definition is designed to draw together all possible obligations of everyone involved with the Association for the purposes of limiting their liability under the Lease to the value of the Association's assets (see clause 10)

"the Premises": Insert brief details to identify the building and any surrounding land. Full details should be inserted in the First Schedule.

1.2: This clause is designed to clarify the purpose of holding trustees and the manner in which they enter into the Lease. They sign the Lease only in their own capacity as trustees.

50 “the Charity Trustees” means the persons from time to time having the general control and management of the Association; “holding trustee” means any holding trustee from time to time appointed by the Association in accordance with the Constitution in relation to the holding of title to this Lease; “the Insured Risks” means loss or damage by fire (including riot fire) lightning, explosion, earthquake, landslip, storm, flood, bursting and overflowing of water pipes, tanks and other apparatus, impact by aircraft or other aerial devices or articles dropped therefrom, impact by road vehicles, theft, and damage by malicious persons and vandals; “the Lessees’ obligations” means all obligations of the Lessees, the Association and of the Charity Trustees under any covenant or any other term of this Lease and all implied obligations of the Lessees, the Association and of the Charity Trustees under this Lease; “the Official Custodian” means the officer appointed pursuant to s.2 of the Charities Act 1993 whose function it shall be to act as trustee for charities in relation to the holding of title to land; “the Premises” means the land and buildings known as [ ] described in the First Schedule and shown in the plan attached thereto; 1.2 The Lessees enter into this Lease as trustees for the Association, and they execute this Lease and hold the estate created by this Lease accordingly. The Lessees have no management responsibilities or powers in relation to the Premises. The Charity Trustees have full responsibility under this Lease for the Premises and accordingly: 1.2.1 any covenant, agreement or condition contained in this Lease which is enforceable by or against the Lessees by reason of the Premises being vested in them shall be enforceable by or against the Charity Trustees as if the Premises were vested in them; and 1.2.2 any reference to the Lessees herein shall, save where such reference is made in regard to the lease of the Premises hereunder or where the context so admits, include also reference to the Association and the Charity Trustees;

51 2. Lease: It is this clause that ensures that the document entered into is a lease and not merely a licence. Rent should, if possible, be of a nominal amount. If the landlord seeks a market rent, this might be a major financial issue for the Association which would have to decide if such rental payment is a good use of scarce resources. The term should be for as long as possible: 28 years is recommended. A long term gives confidence to the Association and its volunteers to plan for the long term and enhances the prospects of the Association obtaining funding from charitable trusts and others.

52 1.3 In this Lease:- 1.3.1 the Clause headings are inserted for convenience only and shall not affect the construction of this Lease; 1.3.2 words denoting the singular shall include the plural and vice versa; 1.3.3 words denoting one gender shall include each gender and all genders; 1.3.4 references to persons shall be deemed to include references to natural persons, to firms, to partnerships, to bodies corporate, to associations, and to trusts (in each case whether or not having separate legal personality); 1.3.5 references in this Lease to “Clauses” and “Schedules” are references to clauses and, where appropriate, sub-clauses and to schedules of this Lease and references to the “parties” or “party” are references to the parties or a party to this Lease; 1.3.6 in every case where the words “the Council” must under this clause be construed as in the plural, all covenants and agreements on the part of the Council herein contained shall be deemed to be made jointly and severally; 1.4 Words and phrases defined for the purposes of or in connection with any statutory provision shall, where the context so requires, be construed as having the same respective meanings in this Lease. 1.5 Reference in this Lease to any statute or statutory provisions includes a reference to: 1.5.1 that statute or statutory provision as from time to time amended, extended or re- enacted or consolidated and 1.5.2 all statutory instruments or orders made pursuant to it; 1.6 Wherever in this Lease the Lessees require the approval of the Council, such approval shall not be unreasonably withheld or delayed by the Council.

2. Lease The Council hereby leases to the Lessees ALL THOSE the Premises TO HOLD the same unto the Lessees from the [ ] day of [ ] Two thousand and [ ] for the term of [twenty-eight] years upon and subject to the terms and covenants hereinafter mentioned YIELDING AND PAYING unto the Council the yearly rent of (£[ ]) (if demanded) clear of all deductions on the first day of January in each year the first payment to be made on the [ ] day of [ ] Two thousand and [ ].

53 3. The covenants are expressed to be given by the Lessees although, by virtue of clause 1.2 it is the Association acting through its management committee that is responsible for them.

3.2 It is for the occupier to pay council tax etc., and it is for this reason that the primary obligation is referred to here as such. However, the Association is entitled to 80% mandatory relief from Uniform Business Rate by virtue of section 43(5) of the Local Government Finance Act 1988. By section 47 of the same Act, a local authority may, in its discretion, award up to a further 20% discretionary relief.

3.3 This is all that the landlord should require as far as use of the building is concerned. If the landlord wishes to specify detailed restrictions or uses for particular parts of the building then a management agreement would be the best place for this.

3.4 The repair obligations placed on the Association should reflect the financial status of the Association as a charity with limited resources. Thus, the landlord should not seek to place too onerous a responsibility on the Association.

Note that at the end of the lease the landlord has the right to inspect the premises to see whether the tenant has complied with its repair obligations. If the tenant has not so complied the landlord may serve on the tenant a list of repairs known as a schedule of dilapidations which will cost the repairs and require payment of that cost. This can come as an extremely unwelcome surprise the to the tenant.

The repair obligations will depend to an extent on the condition of the building at the start of the Lease. The Association should obtain a professional survey and ensure that it is not being required to correct defects in the building. Defects could be required to be put right where they are incidental to a repair and the premises are in a state of disrepair.

This clause is to be interpreted strictly according to its wording, i.e. the landlord can only enforce what is written here and not what it says is inherent in the building. Accordingly, a list of all repair items is set out in detail. The landlord will normally assume responsibility for the exterior and the building structure with the Association responsible for the interior. This list will depend on individual circumstances, of course, but any extension of this list to external parts or the structure of the building or to items of potential large expense is not in the Association's interests.

3.5 Redecoration every five years may be reasonable but the landlord should not seek to make the Association liable to improve or renew any part of the building.

3.6 It is in the Association's interests to keep this obligation as exclusive as possible: try to avoid liability for external and structural parts and ensure that adequate insurance cover is available.

54 3. Rent and Lessees’ covenants The Lessees, to the intent that the obligations may continue throughout the term hereby granted hereby covenant with the Council as follows: 3.1 To pay the yearly rent hereinbefore reserved at the times and in the manner at and in which the same is hereinbefore reserved and made payable; 3.2 To pay and discharge all existing and future rates, taxes, assessments, charges, duties and outgoings whatsoever of an annual or recurring nature whether parliamentary, local or of any other description now or henceforth to become payable, assessed, charged or imposed upon or in respect of the Premises or upon the owners or occupiers in respect thereof and to pay for all electricity consumed on the Premises and all other charges whether metered or otherwise for services consumed on the Premises; 3.3 To promote the use and enjoyment of the Premises as a community centre providing community facilities for the benefit of the public at large [alternative clause: to use the Premises for the purposes and activities of the Association as set out in the Constitution]; 3.4 To keep in [good and tenantable] repair and condition, subject to fair wear and tear, the following parts of the Premises: 3.4.1 All internal door, window and cupboard furniture such as handles, bolts and catches; 3.4.2 Letter boxes, nameplate and notice board; 3.4.3 Plugs and chains to sinks, baths and basins; 3.4.4 Electrical fuses, light bulbs and tubes; 3.4.5 Any items installed by the Association; 3.5 In every fifth year of the term or at such other intervals as may be agreed to redecorate the interior of the Premises in a good and workmanlike manner and with appropriate materials of good quality; 3.6 To the extent that such damage arises as a result of negligence or malicious misuse of the Premises by the Association or by those for whom the Association is responsible, to make good to the reasonable satisfaction of the Council damage caused to the Premises (including without limitation to the generality of the foregoing the replacement of broken or cracked glass whether in windows or doors and the unblocking of waste pipes and drains and gullies);

55 3.7 The landlord may withhold consent whether or not this is unreasonable unless the alteration or addition is an improvement to the building for the Association’s benefit.

3.8 This clause does not relate to hiring of rooms although sub-clause 3.8.2 is designed to ensure that the provision of facilities for external users does not constitute a sub-letting. This clause enables the Association to grant an occupational licence to its trading body, e.g. for bar separation purposes, although only where the Association retains control over such body. It also allows for a change in holding trustees and for the vesting of the Lease in the Official Custodian.

The Lease does not contain any restriction on the hiring of rooms. Any restriction demanded by the landlord should be reasonable and in accordance with a proper hiring policy. Landlords should not seek to deny its charitable tenants the opportunity to hire rooms on a commercial basis as this is a proper means of raising funds for charitable purposes

56 3.7 Not to make any structural or other alterations or any additions in or to the Premises except those previously approved in writing by the Council as landlord, nor, save where such approval has been given, cut or injure the roof, main walls, main timbers or eaves of the Premises nor do anything likely to injure or endanger the same;

3.8 Subject as hereinafter provided, not to assign, charge, underlet or part with the possession of the Premises or any part or parts thereof without the prior written consent of the Council PROVIDED THAT: 3.8.1 if the Lessees or any one of them shall cease to be a holding trustee of the Association they or the survivor or the personal representatives of the survivor of them may assign this Lease to any person or persons who shall for the time being have been appointed by the Association to be a holding trustee and within twenty- one days of such an assignment notice thereof and a certified copy of the relevant assignment shall be given to the Council; 3.8.2 nothing herein contained shall prohibit or restrict the Lessees from providing to third parties facilities for the use of the Premises (whether by way of hire, occupational licence or otherwise) for purposes consistent with the use of the Premises permitted under this Lease provided that no relationship of landlord and tenant is thereby created; 3.8.3 Subject to sub-clause 3.8.5, nothing contained in this Lease shall prohibit or restrict the Lessees from permitting a connected body, by way of occupational licence or otherwise, to provide services or facilities (including but without limitation the operation of a bar or catering facilities) within the Premises where the provision of such services or facilities by the Lessees would not be a breach of the terms of this Lease; 3.8.4 The following are connected bodies for the purpose of sub-c1ause 3.8.3; (a) any unincorporated association in respect of which the Charity Trustees or persons nominated by them retain the majority of voting rights at a general meeting; (b) any corporate body in which the Charity Trustees or persons nominated by them hold the majority of voting rights; 3.8.5 The provision of services or facilities by a connected body shall be permitted only in accordance with written terms which shall be subject to the Council’s approval;

57 3.10/11/14/15/16 The Association is responsible under these clauses not only for its own acts but also for the acts of people and organisations that it allows to use the building. When hiring out rooms the Association must ensure that the hirer is under similar obligations. Community Matters can supply a model hiring agreement – see Information Sheet 61.

3.12 This clause is designed to give a good degree of flexibility to the Association. The landlord should not be able to object if any sign is inside the building and no damage is being done.

58 3.8.6 Nothing herein contained shall prevent the Lessees from vesting their interest in the Premises and this Lease in the Official Custodian or from assigning such interest to any corporate body resulting from the incorporation of the Association; 3.9 To apply for and be responsible for the cost of obtaining a licence where appropriate and to apply for the prior written approval of the Council to use or to permit the use of the Premises for the performance of public entertainments in music and dancing, stage plays, boxing, wrestling, gaming or for the sale or supply of intoxicating liquor of any kind or of food for consumption either on or off the Premises which now or in the future may require licence or consent under statute; 3.10 Not to use or permit to be used the Premises or any part thereof for any sale by auction (other than an auction for charity purposes) or for any purpose whatsoever other than as a centre providing community facilities in furtherance of the objects from time to time of the Association; 3.11 Not to carry on or to permit or suffer to be carried on any part of the Premises any offensive, noisy or dangerous trade, business or occupation, nor to permit or suffer the Premises to be used as a factory or place of manufacture or for any illegal or immoral purpose or so as to cause nuisance, annoyance or inconvenience to the Council or the neighbourhood (save that reasonable use of the Premises in accordance with Clause 3.9 shall not be deemed to be in breach of the covenant contained in this present sub-clause) nor do or permit or suffer to be done upon the Premises nor omit to do on the Premises anything the doing or omission of which may invalidate or prejudicially affect any insurance of the Premises or which may lead to payment of any policy moneys being refused in whole or in part or cause an increased or extra premium to be paid (save where the Lessees have agreed to pay the relevant increase or extra premium); 3.12 Not without the previous approval in writing of the Council to exhibit upon any exterior part of the Premises (including the windows thereof) any permanent fascia, signboard, hoarding, advertisement, fixed pole, sign, flag or placard or any writing of any description provided that no consent as aforesaid shall be required for the exhibiting of any fascia, signboard, hoarding, advertisement, fixed pole, sign, flag or placard or other writing of any description where either: 3.12.1 the same is not visible from the outside of the Premises or 3.12.2 the same is to be removed within a period not exceeding fifty six days from the date when it was first exhibited;

59 3.13 Landlords are entitled to gain entry to the building for these limited purposes only. It is important that notice is given both of the visit and of any work to be done.

3.17 The Association must take out insurance covering the interior of the building and other areas for which it is responsible under the Lease, and third party liability cover.

60 3.13 To permit the Council by its duly authorised agents and officials with or without workmen and others at all reasonable times in the daytime and upon reasonable prior notice to enter upon the Premises in order to examine the state and condition thereof and for all reasonable purposes and the Lessees shall repair and make good with materials to be approved by the Council all defects and repairs for which the Lessees are responsible hereunder and of which notice in writing shall have been given to the Lessees and to the Association by the Council or left at the Premises within two calendar months after the giving of such notice; 3.14 Not to keep or permit or suffer to be kept on the Premises or any part thereof any materials of a dangerous, explosive or inflammable nature or any materials the keeping of which may contravene any Statute or any rule, regulation or bye-law made by any authority, local or otherwise, having power to make rules, regulations or bye-laws, or any materials which constitute an unreasonable nuisance to the lessees or occupiers of other parts of the building (if any) of which the Premises form part or of property in the neighbourhood; 3.15 Not to place, bring or use or permit or suffer to be placed, brought or used in or upon the Premises or any part thereof anything which shall by reason of the weight, condition, nature or use thereof in any way damage, injure or endanger or in the reasonable opinion of the Council be likely to damage, injure or endanger any floor or the structural stability of the Premises; 3.16 Not to store keep or display any goods, materials, machine, hoarding, advertisement or any other thing whatsoever outside the buildings erected on the Premises without the previous written approval of the Council and at all times to keep the space in front of the Premises clear of all obstructions; 3.17 To insure and keep insured in a insurance office of good repute against damage or destruction by fire and such other risks and perils as the Council may reasonably require the fixtures and fittings in or upon the Premises and also against third party claims against the Lessees in respect of death of or injury to any person or persons and/or damage to property movable or unmovable arising from the condition of the Premises or the user thereof and to produce on request to the Council the receipt for the current year’s premium or premiums;

61 3.18 These responsibilities are normally placed on occupiers of buildings although they are so comprehensive that the duty to comply with them could result in the Association having to do work that is the landlord's responsibility. This clause is designed to place such responsibility where it belongs in accordance with the Lease.

3.19 This clause is standard and cannot be deleted as the landlord is entitled to charge under the Law of Property Act 1925. The notice referred to is the one required of the landlord when it seeks to bring the Lease to an end by reason of breach of covenant by the tenant A solicitor's advice should be taken as soon as possible after such a notice is issued.

3.20 As occupiers, the Association must not cause damage or nuisance to any neighbours. Any liability to such third parties is down to the Association. However there might be circumstances where an aggrieved third party makes a claim against the Council as landlord. This clause makes the Association liable for any claim against the Council in these circumstances and costs incurred by it in defending such claim.

62 3.18 Subject as hereinafter contained at their own expense to do all things necessary in about

and to the Premises necessary for complying with the provisions of the Town and Country Planning Act 1990, the Offices Shops and Railway Premises Act 1963, the Fire Precautions Act 1971, the Health and Safety at Work etc. Act 1974, Public Health Acts and Factory and Workshops Acts and all local Improvement Acts and with the rules, bye- laws and regulations of any Government Department and all other authorities, local or otherwise, having power to make rules, bye-laws or regulations with reference to the Premises whether required to be carried out by the Lessees or the Council provided that nothing contained in this clause 3.18 shall impose upon the Lessees any obligation to carry out any works or do any things: 3.18.1 for which the Council is responsible pursuant to its covenants contained in clause 4 unless the same is occasioned as a direct result of an alteration carried out to the Premises by the Lessees; 3.18.2 which could reasonably be regarded as works or things constituting more than day to day maintenance for the proper use and enjoyment of the Premises; 3.19 To pay all proper and reasonable expenses including Solicitors’ costs and Surveyors’ fees properly and reasonably incurred by the Council incidental to the preparation and service of a notice or notices under Section 146 of the Law of Property Act 1925 notwithstanding forfeiture is avoided otherwise than by relief granted by the Court; 3.20 Save where any liability of the Council is covered by any policy or policies of insurance in force at the relevant time to indemnify and at all times hereafter to keep indemnified the Council from and against all loss, damage, proceedings and claims suffered by the Council in respect of physical damage caused to any property adjoining the Premises or the owners thereof or users thereof or the users of the adjacent highways arising out of the use and occupation of the Premises by the Lessees; 3.21 If reasonably so required by the Council and at its own expense on termination of this Lease to remove from the Premises any alterations or additions made to the Premises by the Lessees during the term hereby granted and to make good all damage occasioned by such removal; 3.22 To permit the Council at any time during the six months immediately preceding the determination of this Lease to enter upon the Premises and affix and retain without interference upon any part thereof a notice for re-letting or selling the same and to permit

63 3:25 The second schedule is the place to provide details of landlord’s equipment which is left on the premises and for use by the Association. Check who is to be responsible for the equipment (see clause 4.1).

3.26 This clause is included as part of Community Matters' recommendation that a Lease is vested in the Official Custodian. The necessary procedure and forms can be obtained from the Charity Commission.

3.27 As the Association, if it is a charity, will have to prepare annual accounts, it is reasonable for these to be made available to the landlord. If three months is too short then amend the time period accordingly.

The landlord is to insure the items detailed against the Insured Risks. The Association’s interest should be noted on the policy as this will ensure that the insurance company is on notice that any insurance payout may not be due to the landlord for its own use only. Sub-clause 4.1.3 requires that any insurance proceeds are used for the building: landlords should not seek to remove this requirement as otherwise it could retain the monies and leave the premises in a poor state for the Association.

64 all persons with authority from the Council at all reasonable times during the daytime to enter and view the Premises; 3.23 At the determination of this Lease peaceably to quit and deliver up possession of the Premises and all landlord’s fittings and fixtures in and upon the Premises to the Council or to such person as it shall appoint to receive the same in accordance with the covenants on the part of the Lessees herein contained; 3.24 At the end or sooner determination of the term hereby granted to remove from the Premises all fittings in the nature of tenant’s fittings and to make good all damage occasioned thereby; 3.25 To maintain in good order the equipment details of which is set out in the Second Schedule; 3.26 Within one year of the date of this Lease to procure or attempt to procure the vesting of this Lease in the Official Custodian; 3.27 Within three months following the Annual General Meeting of the Association, to submit to the Council: 3.27.1 either independently examined or professionally audited accounts for the preceding financial year (as shall be determined by charity law or company law requirements); 3.27.2 formal notice of the names and addresses of the newly elected Charity trustees and any appointment of new holding trustees; and 3.27.3 any notice of alterations to the Constitution.

4. Covenants by the Council The Council covenants with the Lessees as follows: 4.1 At all times during the term hereby granted to insure and keep insured the Premises (including for the avoidance of doubt the articles set out in Part I of Schedule [ ] but not the articles set out in Part II of Schedule [ ] [in the joint names of the Council and the Lessees][in the name of the Council but with the Lessees’ interest noted or endorsed on the policy] and on the following terms: 4.1.1 the Premises are to be insured against the Insured Risks and such other risks as the Council may in its absolute discretion from time to time deem appropriate;

65 4.3 This is a standard clause which reinforces the implied right of the tenant to ‘quiet enjoyment’ of the premises. This means that the landlord may not do anything to disturb the tenant’s occupation or omit to do anything that would have the same effect.

4.4 As with clause 3.4, the landlord's repair obligations are listed and these details will depend on individual circumstances.

66 4.1.2 the insurance shall be for such sum as the Council shall from time to time be advised as the full cost of site clearance, professional fees, Value Added Tax, rebuilding and re-instatement; 4.1.3 the Council shall apply any insurance monies in the rebuilding or reinstatement of the Premises in case of damage by an Insured Risk; 4.2 That the Lessees shall not be responsible for any damage for which the Council is compensated under such insurance policy; 4.3 That the Lessees paying the rent hereby reserved and observing and performing the covenants and provisions herein contained and on the part of the Lessees to be observed and performed shall and may peaceably and quietly possess and enjoy the Premises during the term hereby granted without any interruption from or by the Council or any person or persons rightfully claiming through under or in trust for it PROVIDED ALWAYS that the acts of the Council carried out in pursuance of its statutory powers and obligations shall not be deemed to be a breach of this covenant; 4.4 To maintain and repair the Premises (other than those parts of the Premises for which the Lessees are responsible in accordance with this Lease) and to keep the same in good and tenantable repair and condition including (but without prejudice to the generality of the foregoing): 4.4.1 all roofs, gutters, pipes, drains and other conduits and chimney stacks; 4.4.2 all foundations, walls, doors, and window frames; 4.4.3 all exterior decorations; 4.4.4 pathways, steps and other means of access in and about the Premises; 4.4.5 all floors and ceilings, doors and door frames, skirtings and thresholds in and of the Premises; 4.4.6 garages and external stores in and of the Premises; 4.4.7. boundary walls, fences and gates of the Premises; 4.4.8 water pipes, gas pipes and electrical wiring in the Premises; 4.4.9 basins, sinks, baths, toilets, flushing systems and waste pipes in the Premises (except blockages in sink, bath and toilet waste pipes caused by the negligent or malicious misuse of the same by the Lessees or those for whom the Lessees is responsible); 4.4.10 water heaters, boilers, fireplaces, warm air heaters and radiators in the Premises; 4.4.11 sockets and light fittings in the Premises;

67 5. Forfeiture is the technical term used for the right of a landlord to bring a Lease to an end by reason of a breach of covenant by the tenant. This right is also available where the tenant is bankrupt or ceases to operate. Despite this clause saying that the landlord can re-enter the premises, i.e. take them over, the courts often lean against this 'self-help' remedy and require the landlord to obtain an appropriate court order.

The landlord must serve on the tenant a notice of breach of covenant under section 146 of the Law of Property Act 1925. This notice must

 specify the breach complained of; and require it to be remedied if that is possible; and  require the tenant to pay money by way of compensation for such breach if possible; and  require the tenant to pay money by way of compensation for such breach if the landlord so requires.

The tenant may apply to the courts for relief against forfeiture before the landlord takes possession. The court has a discretion whether or not to grant or refuse relief, having regard to the circumstances, the conduct of the parties, and to all the circumstances, and may make such order as it thinks fit.

6. This clause enables the Association to end the Lease at any time on three months notice. It is designed to enable charities to reduce their financial exposure bearing in mind that charitable assets and resources are to be used mainly only for charitable purposes and a lease can be a wasting asset. The landlord should not seek to have the same right to end the lease

68 4.4.12 all glass in and of the Premises PROVIDED THAT the Council will not be responsible for repairs: (a) to those parts of the Premises referred to in clause 3.4 and (b) arising as a direct result of the failure of the Lessees to comply with its obligations contained in clause 3.6.

5. Forfeiture If the rents hereby reserved or any part thereof shall remain unpaid for twenty one days after becoming payable (whether formally demanded or not) or if any of the covenants on the part of the Lessees hereinbefore contained shall not be performed or observed and, if capable of being remedied, are not remedied within a period of one month after written notice regarding the same has been delivered by the Council to the Lessees and the Association, or if the Association shall become bankrupt or being a corporate body go into liquidation whether compulsory or voluntary (except for the purpose of reconstruction, amalgamation or other similar purposes not involving a realisation of assets) or if the Association shall make any assignment or composition for the benefit of the Association’s creditors or have a receiver appointed or suffer any distress or process of execution to be levied upon goods of the Association or if the Association shall cease to exist (other than in circumstances where it has incorporated itself) or shall become moribund with no reasonable likelihood of the objects of the Association being continued, then and in any such case it shall be lawful for the Council at any time thereafter to re-enter upon the Premises or upon any part thereof in the name of the whole and thereupon this Lease shall absolutely determine but without prejudice to any right of action of either party against the other in respect of any antecedent breach or non observance of the covenants on the part of the Council or the Lessees (as the case may be) hereinbefore contained.

6. Determination If at any time during the term hereby granted the Lessees shall give to the Council not less than three months previous notice in writing of the desire of the Lessees to determine the demise herein contained (which said notice may expire at any time) then upon the expiration of such notice this demise shall thenceforth cease and determine but without prejudice to any claim by either party against any other party in respect of any antecedent breach of any covenant or condition contained in this Lease.

69 8. Any notice given by the tenant to the landlord and vice versa must be made in accordance with this clause for it to be effective and to be capable of production as evidence in the courts.

9. This clause ensures that insofar as a local authority is required in law to take some type of action in regard to the occupation of premises, it may exercise such right or duty notwithstanding anything contained in the Lease. An example might be health and safety legislation which places a duty on a local authority to investigate and take action against an occupier.

10. This clause is designed to limit liability of the holding trustees of the Association and of the Charity Trustees (the members of the management committee) to the value, of the Association’s assets, and to exclude personal liability in the stated circumstances. A holding trustee’s liability ceases after he or she ceases to be a holding trustee. The landlord should not seek to exclude or reduce the effect of this clause because the people who are responsible under the Lease are volunteers and gain no financial reward for entering into it.

70 7. Access of light It is hereby agreed and declared that the Lessees shall not be entitled to any right of access of light or air to the Premises which would restrict or interfere with the user of the Council’s adjoining or neighbouring land or the site of any existing building for building or any other purpose or purposes whatever.

8. Notices Any notice to be given under this Lease shall either be delivered personally or sent by first class recorded delivery post or fax. The address for service of each party and of the Association and any Charity Trustee shall be the address stated herein or any other address for service previously notified to the Council or (in the absence of any such notification) his last known address. A notice shall be deemed to have been served as follows:-

8.1 if personally delivered, at the time of delivery; 8.2 if posted, at the expiration of 48 hours after the envelope containing the same was delivered into the custody of the postal authorities; and 8.3 if sent by fax at the time of transmission; In proving such service it shall be sufficient to prove that personal delivery was made, or that the envelope containing such notice was properly addressed and delivered into the custody office of the postal authority as a prepaid first class recorded delivery letter or that the fax was electronically acknowledged as received as the case may be.

9. Local Authority functions For the avoidance of doubt nothing herein contained or implied shall prejudice or affect the Council’s rights, powers, duties and obligations in the exercise of its functions as a local authority and the rights, powers, duties and obligations of the Council under all public and private statutes, bye-laws, orders and regulations may be as fully and effectually exercised in relation to the Premises as if it were not the owner thereof and as if this Lease had not been executed by it.

10. Limitation of liability It is hereby agreed and declared:

71 72 10.1 no liability shall attach to any person named in this Lease as a Lessee in respect of any breach of the Lessees’ obligations or any of them which occur at a time after the term hereby granted has ceased to be vested in such person; 10.2 the liability of the Lessees or any Charity Trustee in respect of any breach of the Lessees’ obligations or any of them shall be limited in amount to the realised value of the Association’s Assets and nothing contained in this Lease shall entitle the Council to pursue, exercise or enforce any right or remedy in respect of any such breach against the personal estate, property, effects or assets of any person or persons from time to time comprising the Lessees or being a Charity Trustee or against any assets for the time being vested in such person which do not form part of the Association’s Assets. 10.3 the liability of the Lessees and of the Charity Trustees to observe and perform the Lessees’ obligations and their liability in respect of any breach of the Lessees’ obligations or any of them shall be joint only and not several. 11. Charity certificate The land demised by this lease will, as a result of this lease, be held by [in trust for] [charity], a non-exempt charity, and the restrictions on disposition imposed by section 36 of the charities Act 1993 will apply to the land (subject to section 36(9) of that Act).

IN WITNESS this Lease has been executed as a Deed and has been delivered upon its dating. THE FIRST SCHEDULE hereinbefore referred to All those premises situate at [ ]

(Full description required) (Site plan if available) THE SECOND SCHEDULE hereinbefore referred to (List of equipment)

THE COMMON SEAL of ) [the Council] was hereunto ) affixed in the presence of: )

Mayor Chief Executive

73 Appendix 2 MODEL DECLARATION OF TRUST

NB: This model is to be used where an unincorporated community association enters into a lease. It is to be signed by the holding trustees only and not by members of the management committee.

Declaration of trust by holding trustees in respect of a community building

1. The several persons whose names and addresses are set out in the First Schedule hereto (hereinafter called the “Holding Trustees”) HEREBY DECLARE on a joint and several basis that they hold the leasehold interest in the property described in the Second Schedule hereto (hereinafter called the “Trust Property”) upon trust absolutely as a Community Centre for the use of the [ ] Community Association (hereinafter called the “Association”).

2. The management and control of the Trust Property shall be vested in the General Committee of the Association (hereinafter called the “Committee”) and the Holding Trustees shall comply with such lawful directions as may be given from time to time by the Committee.

3. The number of Holding Trustees shall be not less than [ ] nor more than [ ].*

4. A Holding Trustee shall cease to be a Holding Trustee if he or she sends to the Secretary for the time being of the Committee a notice in writing of his or her intention to resign and his or her resignation is accepted by the Committee or if he or she is adjudged bankrupt or makes a composition or arrangement with his or her creditors, or if he or she is disqualified from being elected as or being a Holding Trustee by reason of corrupt or illegal practices, or if he or she becomes incapable by reason of mental disorder, illness or injury of managing his or her own affairs.

5. The power of appointing a new Holding Trustee or new Holding Trustees of this Deed shall be vested in the Committee.

* You should insert in the vacant spaces the minimum and maximum numbers of trustees stated in your constitution., If it does not specify these, “not less than three nor more than four” is recommended.

74 IN WITNESS whereof this Declaration of Trust is executed as a Deed by the Holding Trustees this day of 200

Signed as a Deed by [ ] etc.

THE FIRST SCHEDULE [Insert names and addresses of Holding Trustees]

THE SECOND SCHEDULE [Insert details of Lease and property]

75 Appendix 3 SAMPLE MANAGEMENT AGREEMENT

This sample management agreement assumes that the community association occupies the premises under a lease

DATE:

PARTIES:

(1) [ ] Council of [ address ] (hereinafter called “the Council” which expression shall where the context so admits include the person for the time being entitled to the reversion immediately expectant on the term hereby granted) and

(2) The [ ] Community Association, acting by its present charity trustees whose names and addresses are set out in the Schedule hereto (hereinafter called “the Association”).

RECITALS

A. The Council has [on the date hereof] granted a Lease of the Premises for a term of [ ] years to holding trustees for the Association and the parties hereto wish to enter into this Agreement to record the main responsibilities of each party for the running of the Community Centre.

B. This Agreement has been drawn up in conjunction with the [xx federation of community organisations] and is intended to complement and be consistent with the Council’s adopted community services policy and other relevant policies dealing with health and safety and equal opportunities.

C. The parties recognise that the purpose of this Agreement is to foster a partnership approach between the Council, the Association and other local community organisations.

OPERATIVE PROVISIONS

1. Definitions and interpretation

1.1 In this Agreement the following terms shall, except so far as the context otherwise requires, have the following meanings:

“Association” means the [ ] Community Association of [address], an unincorporated association and a registered charity (registration number [ ]), constituted in accordance with the provisions of a constitution duly adopted on [ ];

76 “Association’s Assets” means all assets of the Association which are for the time being vested in the Charity Trustees as charity trustees of the Association;

“Charity Trustees” means the persons whose names and addresses are set out in the Schedule hereto, and which expression shall include their successors in title and all other persons from time to time having the general control and management of the Association, and exclude persons who shall after the date hereof have ceased to be Charity Trustees of the Association in accordance with the Constitution;

“Community Centre” means the community centre operating from the Premises;

“Constitution” means the said constitution of the Association and, in the case of the incorporation of the Association, its constitution or Memorandum and Articles of Association (as the case may be), all as subsequently amended from time to time in accordance with the provisions thereof;

“Lease” means the lease of the Premises dated [with today’s date] and made between (1) the Council and (2) the holding trustees for the Association

“Association’s obligations” means all obligations of the Association and of the Charity Trustees under any covenant or any other term of this Agreement and all implied obligations of the Association and of the Charity Trustees under this Agreement;

“Premises” bears the meaning attached thereto by the Lease;

1.2 In this Agreement:-

1.2.1 the Clause headings are inserted for convenience only and shall not affect the construction of this Lease;

1.2.2 words denoting the singular shall include the plural and vice versa;

1.2.3 words denoting one gender shall include each gender and all genders;

1.2.4 references to persons shall be deemed to include references to natural persons, to firms, to partnerships, to bodies corporate, to associations, and to trusts (in each case whether or not having separate legal personality);

77 1.2.5 references to “Clauses” and “Schedules” are references to clauses and, where appropriate, sub-clauses and to schedules of this Agreement and references to the “parties” or “party” are references to the parties or a party to this Agreement;

1.2.6 in every case where the words “the Council” must under this clause be construed as in the plural, all covenants and agreements on the part of the Council herein contained shall be deemed to be made jointly and severally;

1.3 Words and phrases defined for the purposes of or in connection with any statutory provision shall, where the context so requires, be construed as having the same respective meanings in this Agreement.

1.4 Reference in this Agreement to any statute or statutory provisions includes a reference to:

1.4.1 that statute or statutory provision as from time to time amended, extended or re- enacted or consolidated and 1.4.2 all statutory instruments or orders made pursuant to it;

1.5 Wherever pursuant to this Agreement the Association requires the approval of the Council, such approval shall not be unreasonably withheld or delayed by the Council.

2. Council’s responsibilities

The Council shall [in accordance with its current policies]:

2.1 pay: the salaries and related costs of Council staff appointed to participate in the running of the Community Centre; statutory rates, water and refuse collection charges related to the Community Centre;

2.2 meet the general repairs and maintenance of the Community Centre and the Premises and the mains service charges within approved Council budgets for these purposes;[ to be amended in accordance with the Lease provisions]

2.3 pay an annual contribution towards the running costs of the Community Centre, including but not limited to fuel consumed, power, telephone rental, caretaking and cleaning, secretarial and/or clerical expenses, equipment and activities and any other costs approved by the Council under the current system of grant aid to community associations; ;[ to be amended in accordance with the Lease provisions]

2.4 consider, upon formal application by the Association, any additional assistance towards the running costs of the Community Centre if the Association has financial difficulties or liabilities beyond its control;

2.5 allocate (in consultation with the Association) a suitable part of the time and effort of the Council’s Community Development worker(s) to supporting the work of the Association;

78 2.6 provide (in consultation with the Association) a programme of induction, support, supervision and training for all staff and volunteers working at the Community Centre;

2.7 provide (in consultation with the Association) general support to the Association in its work at the Community Centre and in the area of benefit;

2.8 nominate, in agreement with the Association, a representative to the General Committee of the Association. [Whether voting or non-voting will need to be agreed between the Council and the Association]

3. The Association’s responsibilities

3.1 The Association shall adopt, by no later than [ ] the current model constitution recommended by Community Matters (the National Federation of Community Organisations).

3.2 The Association shall, in accordance with the principles of such constitution and with charity law generally, work towards:

3.2.1 encouraging members of the public in the area of benefit to take an active part in the work of the Association and the management of the Community Centre;

3.2.2 responding to the needs of different sections of the community in the area of benefit, particularly those who have been identified by the Council as being most in need of the Association’s support;

3.2.3 providing a meeting place where the community in the area of benefit can develop the skills, knowledge and experience to set up activities to meet their social, recreational, economic and educational needs;

3.2.4 providing a policy statement promoting equal and open access to the Association and to the Community Centre for all the community in the area of benefit;

3.2.5 encouraging users of the Community Centre [and member groups within the Association] to keep aware of social needs in the area of benefit and use a community development approach towards meeting them;

3.2.6 conducting its business democratically and effectively.

3.3 The Association shall operate and manage the Community Centre in accordance with charity law and with the good practice guidelines published from time to time by Community Matters and/or the local Federation of Community Organisations, and:

3.3.1 appoint necessary staff on an appropriate scale for the post, and provide job descriptions, contracts of employment and appropriate insurances;

3.3.2 utilise volunteers wherever necessary or desirable in the running of the Community Centre and observe good practice in relation to volunteers as

79 published from time to time by The National Centre for Volunteering, the National Association of Volunteer Bureau and Community Matters; and

3.3.3 keep in force all appropriate insurance policies for the Association and (subject to the terms of the Lease) the Community Centre; [ to be amended in accordance with the Lease provisions]

3.4 The Association shall apply in [month] each year to the Council for grant aid towards the Community Centre’s running costs and the Association’s activities in accordance with the Council’s current grant aid procedures. As part of such application, it shall prepare a development plan to develop the work of the Association at the Community Centre and within the area of benefit. The development plan shall include:

3.4.1 a statement of its aims and objectives for the ensuing year;

3.4.2 a draft programme for carrying them out;

3.4.3 arrangements for reviewing progress at the end of the year; and

3.4.4 an annual report for members of the Association and for the Council.

3.5 The Association shall publicise the work of the Association and of the Council.

4. Joint responsibilities

The parties agree that:

4.1 they shall consult on job descriptions, job requirements, recruitment arrangements and current Council guidelines for all staff employed at the Community Centre;

4.2 Council staff based at the Community Centre shall not be required to undertake duties on behalf of the Association which in the Council’s reasonable opinion may create a conflict of interest;

4.3 in case of any dispute over staffing, they shall consult in accordance with a code of practice to be agreed between the parties;

4.4 they shall consult on community needs within the area of benefit and on ways of meeting those needs;

4.5 they shall consult and draw up as code of practice for the health and safety in the Community Centre of the Association’s members and staff and Council staff based at the Community Centre;

4.6 they shall consult and draw up as code of practice for the support and supervision of volunteers working for the Association in the Community Centre and within the area of benefit; and

4.7 they shall not permit a permanent, licensed bar in the Community Centre].

80 5. Limitation of liability It is hereby agreed and declared:

5.1 no liability shall attach to any Charity Trustee in respect of any breach of the Association’s obligations or any of them which occur at a time after such person has ceased to be a member of the Association’s General Committee.

5.2 the liability of any Charity Trustee in respect of any breach of the Association’s obligations or any of them shall be limited in amount to the realised value of the Association’s Assets and nothing contained in this Agreement shall entitle the Council to pursue, exercise or enforce any right or remedy in respect of any such breach against the personal estate, property, effects or assets of any person or persons from time to time being a Charity Trustee or against any assets for the time being vested in such person which do not form part of the Association’s Assets.

5.3 the liability of the Charity Trustees to observe and perform the Association’s obligations and their liability in respect of any breach of the Association’s obligations or any of them shall be joint only and not several.

IN WITNESS this Agreement has been executed as a Deed and has been delivered upon its dating.

THE COMMON SEAL of ) [the Council] was hereunto ) affixed in the presence of: )

Mayor

Chief Executive

THE SCHEDULE above referred to

Names and addresses of the Charity Trustees

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