Part 2: Charity Land Section 18: Exceptions to restrictions on dispositions or mortgages of charity land
Section 18 amends the exceptions to the general restrictions on dispositions and mortgages of charity land set out in sections 117(3) and 124(9) of the CA 2011.
	Subsections (2)(a) and (3)(a) insert a new subsection (aa) into sections 117(3) and 124(9) of the CA 2011 which provides that a disposition or mortgage of charity land by a liquidator, provisional liquidator, receiver, mortgagee or administrator is not subject to the restriction under section 117(1) or 124(1) respectively. Obtaining the best terms for the proposed disposition or mortgage is secured by the general duties of the liquidator, provisional liquidator, receiver, mortgagee or administrator, rather than by requiring the charity trustees (who have no decision-making role in the transaction) to obtain particular advice.
	Subsections (2)(b) and (3)(b) remove the exception for dispositions or mortgages which would have required the authorisation or consent of the Secretary of State under the Universities and College Estates Act 1925 ("the UCEA 1925") (under sections 117(3)(b) and 124(9)(b) of the CA 2011). This reflects the amendments to the UCEA 1925 which remove any involvement of the Secretary of State in approving such transactions (see section 24 at paragraph 122 and following below).
	Subsection (2)(c) substitutes section 117(3)(c) of the CA 2011 with a new subsection which clarifies when a disposition of charity land made to another charity will be excluded from the restriction in section 117(1). The exception as amended will apply where the disposition is neither (1) a commercial transaction (i.e. intended to achieve the best price that can reasonably be obtained); nor (2) a social investment (as defined in section 292A of the CA 2011). This will ensure that in cases where the price obtained as a result of the disposition is a motivating factor (even if only a partial one in the case of a social investment) charities will have to comply with the advice requirements in Part 7 which are designed to protect against disposals at an undervalue. The provision removes the requirement under the existing subsection (c)(ii) that the disposition be authorised by the trusts of the charity. The amendment is intended to clarify that no express provision in the trusts of the charity authorising the disposition is required in order for it to fall within the exception. But the amendment does not allow charities to make dispositions which they would not be permitted to make under the trusts of the charity.
								Example (4a): Exception to the requirement to obtain advice under section 117(3)(c)
								Charities A and B have similar purposes. Charity A wishes to transfer its assets and operations to Charity B. The land owned by Charity A is to be transferred to Charity B for a nominal sum. In effect, the trustee of the land is changing from Charity A to Charity B; the charitable purposes for which the land is held remain the same. The section 117(3)(c) exception would apply to this disposition because the price paid by Charity B is not a motivating factor in Charity A’s decision to dispose of the land.
								Example (4b): Exception to the requirement to obtain advice under section 117(3)(c)
								Charity A, a homelessness charity, owns a long lease of a flat worth £100,000. It wants to sell the lease to Charity B, another homelessness charity, for £80,000 to be used for providing accommodation to homeless people at a low rent. The transaction is motivated by both the financial return (the purchase price of £80,000) and the direct furtherance of Charity A’s purposes (the provision of accommodation for homeless people). It is therefore a social investment, and the section 117(3)(c) exception would not apply. Charity A will need to obtain advice in accordance with Part 7 in order to proceed with the transaction. Equally if Charity A was trying to sell the flat for the best price possible, perhaps because it wanted to liquidate the asset and spend the proceeds of sale on furthering its purposes, then the fact that it was selling to another charity would not be sufficient for the section 117(3)(c) exception to operate. Charity A would still need to obtain advice in accordance with Part 7.