With advice from those who have expertise, trustees should be able to make their way confidently through the web of obligations, to the benefit of their charity's mission, say Benjamin Tobin and Hugh Pearce

You are a trustee of a charity that was left a shop that the charity wishes to sell.

The adjoining grocer has made an offer in excess of the price recently achieved for another nearby shop.

The grocer has a letter from an estate agent whom you respect, confirming the price of the other shop.

This keeps things tidy for the records in case anyone enquires, so you advise the trustees to proceed with the sale.

The lawyer acting for the charity knows the area well and agrees with you.

But...the writ (or at least the Charity Commission investigations division) is waiting in the wings.

To set the historical context, before 1992, any disposal of this type by a charity needed Charity Commission consent.

The 1992 legislation introduced the principle of permitting a disposal without needing such consent using the qualified surveyor's report (QSR) process.

Had the disposal been to another charity with compatible charitable trusts, then it may have been possible for the trustees to accept less than market value.

However, this certainly will not apply here.

The trustees should also be aware that the QSR will not assist where the disposal is to a connected person (the principal concern being to a trustee or someone connected with the trustees), where Charity Commission consent is needed anyway, for obvious reasons.

In relation to this land disposal, the charity trustees must consider:

l Do they have power to dispose of the land?

l Are there any relevant restrictions on the land (for example, personal rights, restrictive covenants/clawback provisions, reverter)?

l Is this functional land of the charity (in other words, is it required to be used for the charity)? If it is, a special notice is required.

l Is the disposal beneficial to the charity?

l To avoid the need to get the commissioner's consent by using the QSR route, what are the report's recommended means of disposal (which must be followed)? And, are the terms of the intended disposal, in the trustees' opinion (based on the report's advice on value and the terms), the best reasonably obtainable?

The legislation requires the surveyor to be qualified by the Royal Institution of Chartered Surveyors (RICS) and competent and experienced in the field.

The regulations place requirements on the surveyor as to content and format of the report and specify that advice must be given as to the manner of disposal and the expected value, with a view to the terms being the best reasonably obtainable.

The report needs to cover a range of issues, such as whether the land should be divided or repaired; whether it should be advertised (and how); and if not, why not.

Where the surveyor is unable to give such advice, then a statement to that effect must be provided.

The surveyor has to value on the basis that his advice is followed and acted on and where recommendations are made he must specify what effect on value these recommendations would have.

Where the surveyor advises not to advertise, believing a higher price could be obtained, he has to specify the reason why (for instance, a special purchaser will pay more).

Where the surveyor's view is that the proposed disposition is not in the interests of the charity, he must advise as to what the best use of the land would be and what action should be taken to maximise value.

Usually the surveyor should be required, following marketing, to provide a supplemental report on the results of the marketing and the offers received so that the trustees have confirmation that the proposed transaction is, in the surveyor's opinion, on the best terms reasonably obtainable.

The trustees are not obliged to follow the opinion, but it would be hard for them to do otherwise and feel confident that they had acted in the interests of the charity.

It is important to note that the definition is 'best terms' and not 'best price', as, for instance, appears in the local government legislation.

While often this will mean best price, it may not always.

Other factors, such as collateral terms of the transaction, are relevant.

Also best price may not mean highest price if the offer is not realisable.

Charity Commission circular CC28 of November 2003 states: '...there may, however, sometimes be other elements in the proposed sale that will benefit the charity or advance its purposes, eg if the charity owns adjoining land ...

or the land is being sold to another charity with similar purposes.'

The circular continues that trustees cannot sell at less than best price to avoid selling to a purchaser whom they find objectionable; the charity's interests must come before the trustees' personal preferences.

However, the trustees may reject an offer where they have reasonable grounds for believing that the purchaser will use the land contrary to the purposes of the charity.

Where they accept a lower price, they must be clear that this is to the advantage of the charity.

The surveyor or other adviser should be instructed to assess the value of any non-monetary elements in an offer.

Chartered surveyors are also bound by the practice statements of the RICS appraisal and valuation manual, where appendix 6 reflects the content of the regulations and circular.

Once the decision has been made to proceed and the QSR process completed, there will be some technical items to go into the conveyancing documentation, prescribed by the 1993 Act.

For lawyers, the Land Registry provides a full practice guide (PG14) under the new land registry rules and the Charity Commission circulars are also helpful.

However, careful consideration is needed for every case and proper advice should always be sought.

The opening scenario may seem contrived, but both the writers' firms regularly come across charities and advisers, some of significant standing, who have not been aware of the requirements.

Trustees have a duty to take appropriate professional advice.

Trustees who are also professionals in their working lives have an extra burden of duty of care on matters relating to their professional field, though they are not necessarily knowledgeable of the particular law and practice and so perhaps would especially benefit from taking advice.

Trustees who provide their time, usually free, to charities are to be praised and do not deserve to find themselves, through lack of knowledge, in default of the requirements.

Given timely advice from those with expertise in the field, trustees should be able to pass, confidently and successfully through the web of obligations, to the greater good of their charity's mission.

Benjamin Tobin is a chartered surveyor, auctioneer and director of London based Strettons-Edwin Evans Chartered Surveyors.

Hugh Pearce is a partner in the charity and education group of London and Bath-based law firm Stone King, where he is head of the commercial property unit