Options for the Disposal of Redundant Churches and Other Places of Worship
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Options for the disposal of redundant churches and other places of worship JANUARY 2010 1 Introduction This guidance note sets out options that are open to trustees wishing to dispose of places of worship that are no longer needed for regular worship. Broadly speaking, and depending on the circumstances, trustees and members of religious charities may wish to: transfer the building to another similar charity that will continue to use it for worship; sell the building and use the proceeds for charitable purposes, or transfer the building to a trust to be preserved and/or used for the benefit of the local community If the building has any special architectural or historic interest, such interest might be best preserved by arranging for the building to continue in use for religious purposes or be used for the benefit of the community. The purpose of the guidance is not to recommend any one course of action, but to make it clear that trustees who wish to dispose of a place of worship are not always obliged to dispose of the property at full market value. The most appropriate option in any particular case will depend on, amongst other things, the exact legal form by which the charity is established, the terms of its governing document and the different laws and regulations that apply to the entity which owns the building. While the guidance describes the most common options in general terms, this is not an exhaustive list, nor should it be relied upon for a full description of legal matters affecting any disposal. Further guidance should always be sought from the Charity Commission and from a trust’s own legal advisers. N.B. none of the following advice applies to Church of England buildings which are subject to the Pastoral Measure 1983. (More information on disposal of those buildings can be obtained from the relevant diocese or from the Closed Churches Division of the Church Commissioners (see page 8 for contact details). 2 What are the options? CASE STUDY In disposing of property held in trust, the Woodbridge Quay Church, Woodbridge, trustees of a charity must act in the best Suffolk interests of the trust and its beneficiaries as required by charity law and, in particular, in accordance with Section 36 of the Charities Act 1993. Where a new owner proposes alterations to a building, trustees of the disposing charity are advised not to confirm any contract for sale until they are satisfied that the new owner has, or is likely to obtain, listed building consent (if applicable) and planning permission for any alterations or change of use. The United Reformed (URC) congregation of In some cases the transfer of property will th require the approval of the Charity Commission, this grade II listed, early 19 century chapel had which will take account of all the relevant shrunk to the point where it was no longer circumstances surrounding the disposal of the possible for it to keep going as an active property in making its decision. worshipping body (and maintain a grade II listed building). Fortunately a Baptist congregation was also using the building and was in a position to take on ownership. The close links OPTION 1. A gift (or disposal at below between the congregations made this the market value) of a place of worship to preferred option for the URC trustees. another charity, permitted by the disposing charity’s governing documents A surveyor was instructed to give a valuation on the property if sold as a church to another A charity can gift its property to another charity Christian denomination and taking into account for free, or at less than market value, if the the urgent building repair work needed. The disposal is permitted by the disposing charity’s fact that the remaining members of the old governing document (section 36(9)(b) of the congregation were to join the new one satisfied Charities Act 1993). If this is the case, Charity the Charity Commission that the sale, although Commission consent for the disposal will not be not at full market value, was in the best required. interests of the disposing charity and in Spring 2009 the sale went ahead. There are two ways in which this disposal of property may be permitted: (i) where the Nevertheless the Commission required a disposal is furthering the purposes of the clawback arrangement so that if the building disposing charity and is, therefore, in execution was sold on for development within a specified of its governing document; or (ii) where the period the URC trust would benefit from any disposing charity has power conferred by its increase in value. The result has been to keep governing document to dispose of land to alive a place of worship with a long history another charity. while also allowing the trustees of the disposing charity to fulfil their obligations. A charity with objects of furthering the Christian faith, for example, might be able to use this option to pass their building onto another – but the objects of the donating charity are Christian charity with similar doctrines, provided included within them – the disposal may still be the objects of the receiving charity are not wider possible but the trusts relating to the disposed than those of the donating charity. Where the property may need to be restricted to the objects of the receiving charity are wider original, narrower objects. 3 If the donating charity had wider objects than solely the promotion of a particular faith, for CASE STUDY example the relief of those in need or the Chapel of St John the Baptist, Matlock Bath, wellbeing of a particular community, it might be Derbyshire able to transfer the building for a range of community uses. If the charity is constituted by separate documents, it is the document that sets out the purpose for which the property may be used that should be consulted when considering a gift of the place of worship, rather than, for example, the document that sets out the purpose for which the congregation’s working funds are held. OPTION 2. Disposal of a place of worship at full market value In 2002, the Friends of Friendless Churches Trustees may decide to realise the value of a acquired this isolated, grade II* listed private property on the best possible financial terms, chapel high above the River Derwent outside particularly if a redundant place of worship has a Matlock in Derbyshire. Built in 1897 to the significant market value, and apply the proceeds designs of architect Sir Guy Dawber it contains to furtherance of the charity’s objects. many fine Arts and Crafts fittings by artists Alternatively it may be that a charity wishes to including Louis Davis and George Bankart. It had dispose of a place of worship to an organisation been owned by a trust set up by the founder which is also a charity but which has objects Mrs Louisa Sophia Harris to care for the chapel which are not sufficiently similar to its own to after her death. By the late 1990s the trust’s justify any reduction in the disposal price. funding from endowments had all but dried up and so it was finding it difficult to discharge its There are two initial tests in relation to this responsibilities. option: The Charity Commission was persuaded to Does the charity have the power and allow transfer to the Friends of Friendless authority to sell the property? Churches in 2000 on the basis of its prescribed Does the charity have the power and charity (or ‘named beneficiary’) status. The authority for receiving and deploying the transfer was made without charge and the small proceeds of sale? amount of money left in the trust was also passed to the Friends. They have undertaken a Assuming these tests are met, in order to programme of repairs, including the gates into dispose of property at full market value, the the churchyard. charity will then need to comply with the requirements of sections 36 and 37 of the Charities Act 1993. This includes: Guidance can be found in the Charity Commission’s publication CC28 – Sales, leases, Seeking professional advice (from a transfers or mortgages: What trustees need to qualified surveyor) on the timing and know about disposing of charity land which is method of the disposal available on the Charity Commission’s website. If Ensuring that the property is marketed in trustees are able to comply with the statutory a way which will encourage the most requirements in relation to the type of disposal offers they are carrying out (contained in sections 36 Accepting the best financial offer which is and 37 of the Charities Act 1993) before made, except where there are other entering into an agreement for disposal they will special factors not need to obtain the Commission’s consent. 4 OPTION 3. CASE STUDY Transfer of the place of worship using the St George’s German Lutheran Church, power given to the Charity Commission by Whitechapel, London the Redundant Churches and other Religious Buildings Act 1969 The Redundant Churches and other Religious Buildings Act 1969 (the “1969 Act”) allows a charity to transfer a redundant place of worship to a ”prescribed charity” (see page 6) for the purposes of preservation, at less than full market value, even if the disposal does not further the disposing charity’s objects. A transfer under section 4(2) of the 1969 Act needs to be authorised by means of a scheme made and approved by the Charity Commission. Trustees should note that this would change the purpose of the building from advancing religion to preservation and conservation.