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Greene & Greene is a long established firm of solicitors based in Bury St Edmunds, Suffolk. Our lawyers advise individuals and businesses based all over the UK.

We regularly attract new clients who have been using firms in London, but now receive a more cost efficient and more personal service from us here in Bury St Edmunds.

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Wednesday
May032017

Land Sale Comes Back to Haunt Trustees 

Helen Hendry, a Solicitor in our Commercial Property team emphasises the importance of obtaining professional advice when it comes to the acquisition or disposal of any property on behalf of a charity or a trust.

In 2010, the Spiritual Association of Great Britain Limited (SAGB) decided to sell its headquarters in one of London’s premium locations, 33 Belgrave Square. SAGB had purchased a long lease in the property back in 1955. The association found the running costs of the property were (in their view) “becoming onerous”. SAGB sold the property in 2010 for £6 Million - significantly less than its market value. The property was then quickly re-sold for £21 Million. The Charity Commission raised an inquiry after media reports arose surrounding the sale, which was found to be slightly complicated by a “particularly restrictive clause” concerning the use of the property. SAGB’s lease stated that the property had to be used as a “non-profit, learned or charitable or cultural association or society use or as an embassy”. However, tenants with leases of more than 40 years, with 25 years already expired, can be brought to the Lands Tribunal to seek modification of such covenants.

The Charity Commission report stated the trustees of SAGB had failed to:

  1. Conduct proper due diligence on the prospective purchaser (a BVI “Brass-Plate” Company);
  2. Obtain specialist and independent advice on how to achieve a maximum return on property disposal; and
  3. Obtain, follow, or take proper account of, appropriate professional advice.

The trustees had been advised about a potential change of use, but they believed that it was too speculative. The buyer acquired the property, secured a change of use and sold it for a £15 Million profit. 

The report stated the sale amounted to “a basic mismanagement by [SAGB’s] trustees.” Whilst no evidence was found that the trustees had received any personal benefit from the sale, as trustees owe fiduciary duties to the charitable trust, this left them open to a claim for SAGB’s losses.

Greene & Greene is able to assist in the acquisition or disposal (which includes letting) of properties on behalf of charities, or trusts. For further advice please contact Helen Hendry by e-mail – helenhendry@greene-greene.com or by phone on 01284 717451.

For more information on the services offered by Greene & Greene Solicitors please visit www.greene-greene.com and follow on Twitter @GreeneGreeneLaw.