Mortgaging charity land—charity's considerations

The following Property practice note provides comprehensive and up to date legal information covering:

  • Mortgaging charity land—charity's considerations
  • Power to mortgage
  • Is consent required?
  • The s 124 procedure
  • Further advances
  • Substituted security
  • Practical steps
  • No need for consent or compliance with s 124 procedure
  • Prescribed statements
  • Prescribed certificate
  • More...

Mortgaging charity land—charity's considerations

FORTHCOMING CHANGE: On 22 March 2021, the government published its response to the Law Commission’s report of 14 September 2017, ‘Technical Issues in Charity Law’. The Report stemmed in part from Lord Hodgson’s review in July 2012 pursuant to section 73 of the Charities Act 2006 (ChaA 2006), ‘Trusted and Independent: Giving charity back to charities’. The Report made 43 recommendations, in 12 areas. The Response wholly or partially accepted 38 of the recommendations. For a commentary on the Response please see News Analysis: Government response to Law Commission report ‘Technical Issues in Charity Law’. Although it is not yet known if any of the recommendations will lead to legislative changes, it is worth bearing the proposals – and the Response – in mind when considering and advising on charity law in general. 

These changes are being implemented by the Charities Bill, which had its first reading in the House of Lords on 26 May 2021. For analysis on the Charities Bill 2021, see: Charities Bill 2021—easing charity administration and to follow the passage of the Bill through Parliament, see: UK Parliament: Charities Bill [HL].

If a charity is proposing to:

  1. mortgage property that it owns, or

  2. acquire property with mortgage finance

there are a number of issues that the charity trustees must consider. There are also various additional steps that must be taken.

In this context, ‘charity

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