Vesting charity land in the Official Custodian 

What is the Official Custodian for Charities? 

The Official Custodian is a corporation created by the Charities Act 2011 whose main function is to hold land on behalf of unincorporated charities. 

‘Vesting land’ in the Official Custodian means that the Official Custodian holds your charity land on behalf of the trustees. 

What sort of charities would benefit from the services of the Official Custodian? 

There are various ways a charity can own property. This is because charities can be constituted in a variety of legal forms, including: 

• Charitable Incorporated Organisations 

• Charitable Companies 

• Unincorporated Associations 

• Trusts 

If the charity is unincorporated this means that it does not have its own legal personality and therefore cannot hold name in its own right or enter in to contracts. Here, a charity may decide to hold land in the name of individual charity trustees (as land holding trustees). Therefore, each time new charity trustees are appointed, there is the potential for there to develop a “mismatch” between the current charity trustees and the land holding trustees; they are not the same thing. In order to update the land holding trustees to in line with the charity trustees the charity must appoint or retire the land holding trustees by deed, either via a deed of appointment/retirement or by a transfer deed. This must then be filed with the Land Registry, to update the proprietorship register for the property. This process creates both an administrative and a financial burden for the charity, especially where the charity holds numerous legal titles. 

Charities that are companies or other corporate entities (i.e. a CIO), will not need to vest land in the Official Custodian, this is because a company or corporate trustee has separate legal personality from its trustees and can hold land in the charity’s own name. Further, where an unincorporated charity is under the trusteeship of a corporate body, the corporate trustee can hold the land on behalf of the charity, irrespective of any turnover in the individuals making up the trustee body. 

Why is the Official Custodian needed? 

We often find that unincorporated charities fail to deal with updating the title to their properties when their holding trustees leave the charity. This can lead to problems when the charity is creating or updating a lease, seeking mortgage finance, merging with another charity or selling the land, as it is the registered proprietors of a property title who must enter into any property deeds. 

If a charity fails to update the Land Registry at the appropriate time the land will remain vested in the individuals who are named on the title. These people may have died or may no longer have any connection to the charity, making them very difficult to trace.  

Advantages of vesting charity land in the Official Custodian:  

• A charity will avoid the financial and administrative burden of updating the Land Registry on a change of trustees.  

• Where a charity holds multiple properties or multiple plots of land, vesting the titles in the Official Custodian will substantially simplify the administration of the charity’s landholdings as all titles would be held in a single name. 

• Vesting charity land in the Official Custodian does not change any of the powers of the charity trustees to dispose of it; the Official Custodian does not need to approve such matters or sign documents; this power remains with the current charity trustees. 

• When land is vested in the Official Custodian the charity trustees keep all the powers and duties of management and will still be responsible for property dealings (this does not offer limited liability for trustees and the Official Custodian does not accept liability for property matters). 

• There is no risk that land or property will remain vested in people who are no longer involved with the charity. 

• Services of the Official Custodian are free. 

• The process is quick, the Commission currently make a single vesting order at the end of each month for all charities who have made a successful application. 

How to vest land in the Official Custodian:  

Land may be vested in the Official Custodian by an order of the Charity Commission, or by an order of the court (the Official Custodian must not be a named party in any conveyance, transfer, lease or other deed acquiring land). The application for a vesting order is made online and we are more than happy to assist charities with the process.   

Once the Charity Commission has issued the order vesting title to land in the Official Custodian, the order should be filed with the Land Registry, to update the title. If the land is unregistered, the Charity Commission encourages trustees to register the land before applying for vesting. 

What will happen when I sell land which is vested in the Official Custodian?  

On disposal of the land, the Official Custodian must be made party to any deed but, except in limited circumstances, it will not need to sign or seal the deed.  

Instead, the deed will be signed in the name of the Official Custodian by the charity trustees.  

At Birketts we highly recommend that unincorporated charities should consider vesting title to their property in the Official Custodian.  

Our dedicated Charity Property Team can assist charities to: 

• Review freehold and leasehold title 

• Make an application to vest charity land in the Official Custodian 

• Make necessary updates to the Land Registry 

• Complete first registration of title