Property related provisions: two changes in section 23
The final property related provisions to come into force are contained in sections 18 and 23 of the 2022 Act. The biggest changes are in section 23, which amend quite significantly the statements that appear in the documents that give effect to charity land disposals.
There are two main changes. One is to remove the drafting construct under which the certificate of compliance with ss117 to 121 of the 2011 Act (i.e. that the disposal had been conducted properly) was given by the charity trustees as distinct from the charity itself. This drafting was particularly problematic for incorporated charities, as it cut across the principle of trustees of those charities operating behind the corporate veil, and gave at least a theoretical risk of personal liability. It also created confusion about appropriate execution of documents and problems getting things registered at HM Land Registry, and so in the round should be a helpful change.
The 'Bayoumi' case on charities act
The other change is to introduce a requirement to include the certificate of compliance with sections 117-121 in a contract for a disposal of charity land as well as in the disposal instrument (most typically a conveyance or lease) itself. The genesis of this change goes back to the 2003 'Bayoumi' case, which was the one that made ensuring substantive compliance with what was then section 36 of the Charities Act 1993 a much more important issue for practitioners that it had been up to that point. The other point clarified by Bayoumi was that the 'saving' provisions in the Act, which create a presumption in favour of third parties that the facts are as stated in the certificate, only applied from completion rather than exchange of contracts, creating a period between exchange and completion (potentially many months) in which third parties were not protected.
Section 23 of the 2022 Act sets out to close the 'Bayoumi' gap, by setting out that the statements confirming that the property is charity land, and the certificate of compliance, should now appear in the contract for the disposal as well as the instrument effecting the disposition itself, and that the saving provisions then apply from exchange of contracts.