Obtaining Surveyor’s Sale Advice (Scotland)

B1 As the requirements of the Charities Act 2011 do not apply in Scotland do we need to obtain surveyor’s advice?

Under the Charities Act 2011 a Qualified Surveyor’s Report (QSR) is required before any charity property can be disposed of in England and Wales.  The Charities Act 2011 does not apply in Scotland and there is no comparative statutory requirement for a specific type of sales report in Scots Law.  However, Managing Trustees of Model Trust property in Scotland are, like Managing Trustees in England and Wales, charity trustees. Managing Trustees in Scotland must act with care and diligence and in the best interests of the charity. This means that Managing Trustees in Scotland must act as prudent charity trustees when dealing with property transactions.  This includes obtaining surveyor’s advice before disposing of the property, to ensure that the disposal is in the best interest of the charity. Please see Section C for details of what the advice should include.

B2 Who owns the property?

The legal owner of nearly all Methodist land and property is the Trustees for Methodist Church Purposes (TMCP). TMCP holds legal title in its capacity as Custodian Trustee on trust for the local Managing Trustees. The property is held on the Model Trusts of the Methodist Church contained in Part III of Schedule 2 to the Methodist Church Act 1976. This means that legal Title is vested in TMCP and TMCP is the registered owner of the property.

However, TMCP is a Custodian Trustee body only and is NOT involved in the day to day control and management of the property. This responsibility falls to the charity trustees who, for the purposes of the Methodist Church, are the Managing Trustees. Custodian Trustees are not charity trustees. However, TMCP Legal will need to see and approve the surveyor’s advice.

B3 Who is instructing the surveyor to prepare the surveyor’s advice?

The property is managed locally by a body of Managing Trustees, the charity trustees. It is the charity trustees who have ultimate responsibility for governing or running the charity. The managing trustee body will usually be the local Church Council or Circuit Meeting but could be other trustee bodies such as District Trustees.

It is the Managing Trustees who will instruct the surveyor and to whom the surveyor owes a duty of care. The individuals comprising the managing trustee body are usually unpaid volunteers. Whilst the body may include surveyors and those with property experience, it could be comprised of individuals who have no experience of disposing of property whatsoever. Whatever the position, the Managing Trustees are charity trustees and the charity is relying on the surveyor to advise it how to ensure that a disposal is in its best interests.

B4 Why does TMCP need to see the surveyor’s advice?

As Custodian Trustee, TMCP is obliged to act, on the lawful instructions of the Managing Trustees. Checking that the Managing Trustees have fulfilled their duties as charity trustees and met their obligations under the Methodist Model Trusts is part of this role.

As prudent charity trustees the Managing Trustees should act on the advice of their professional advisers. If the disposal departs from the surveyor’s recommendations in their initial advice TMCP Legal may ask the surveyor to follow up their original advice to confirm whether they agree with the course of action the Managing Trustees are proposing to take.

Please send a copy of the surveyor’s advice to TMCP once it has been obtained.

B5 At what stage of the transaction do the Managing Trustees need to obtain the surveyor’s advice?

It is highly recommended that the Managing Trustees speak to a surveyor at the earliest opportunity so that they can confirm whether the proposed disposition is in the best interests of the charity and if it is, what action the Managing Trustees need to take to obtain best price.

Speaking to a surveyor at the outset, should provide Managing Trustees with comfort and protection. Managing Trustees as charity trustees are entitled to rely on the professional advice that is given to them. This professional advice provides the Managing Trustees with something to fall back on if questions are raised later as to why a certain course of action was taken. Managing Trustees may feel that it makes sense to use their surveyor’s experience and expertise to guide them and explore all available options.

Obtaining surveyor’s advice without delay should also help the Managing Trustees to avoid spending precious time and resources on one course of action only to be told that it is not in the best interests of the charity to proceed in that way. Managing Trustees may feel that having the endorsement of their surveyor behind them avoids putting themselves and the reputation of the charity locally at risk.

If the Managing Trustees do have ideas for disposing of the property or specific plans for any land retained, these should be discussed with the surveyor so that these ideas can be taken on board. The Managing Trustees should ensure the surveyor knows the Managing Trustees’ intentions and concerns so that they can consider any wider issues and provide advice in their advice that is helpful to the Managing Trustees and specific to the particular situation.

Obtaining surveyor’s advice should not be seen as a mere box ticking exercise but instead, as a positive tool that can really help Managing Trustees to dispose of land in the best interests of the charity or alternatively to identify a different option for use of the property within Methodist ownership.

On the proposed disposal of any Methodist Model Trust property in Scotland, Managing Trustees should ask their surveyor to produce written advice which should:

• Describe the property and, ideally, include a site plan
• Indicate the nature of the title to the property held by the Methodist Church and whether or not there are any burdens or servitudes affecting the property.  The Managing Trustees’ instructed solicitor should review the deeds to the property and advise the Managing Trustees’ surveyor if there are any issues regarding the title or any real burdens or servitudes that affect the property.
• Advise whether or not any repairs and/or alterations are required before advertising the property for sale.
• Advise whether the Managing Trustees should apply for any planning application for change of use or otherwise before advertising the property for sale in order to obtain best price.
• Advise whether the property has any development potential and if the selling agreement should include a planning gain sharing agreement/overage clauses to ensure the charity receives a % of any uplift in value. In this case advice is required on the % uplift, the events triggering payment of the uplift/overage payment and the period during which overage would be payable after conclusion of the sale.
• Advise on the method of marketing to be adopted to achieve best price e.g. private treaty, tender, public auction etc.
• Indicate the current open market value of the property

A copy of the surveyor’s advice must be sent to TMCP once it has been obtained for approval. Managing Trustees may also upload a copy on the Methodist property consents website, however, TMCP do not receive any notification of when documents have been added to the property consents website.

D1 How does the surveyor’s advice detailed in Section C fit in with the “Single Survey" that forms part of the “Home Report" required on the disposal of residential property?

Managing Trustees in Scotland must obtain a “Home Report" when selling residential property. This includes a “Single Survey" which is made available to the buyer. The surveyor’s advice referred to in this Focus Note needs to be obtained in addition to the Single Survey.  This is because the surveyor’s advice detailed in Section C of this Focus Note should remain confidential to the Managing Trustees and should not be disclosed to any potential buyer.  The surveyor who prepares the Single Survey may however be willing to provide the advice detailed in Section C in a separate letter/report.

D2 What are the requirements for an “Action Plan" on the disposal of non-residential property?

If the property has a floor area greater then 1000m² the Managing Trustees will be obliged to prepare an “Action Plan” in accordance with the Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016 (the Regulations).  The Regulations impose a requirement on Managing Trustees to assess the energy and emissions performance of their buildings.

The Action Plan must be prepared by an individual registered with a Scottish Approved Organisation a “Section 63 Advisor”.  Section 63 Advisors registered with Approved Organisations can be found on the Scottish EPC Register.

If the Advisor identifies physical improvements are required these will be detailed in the Action Plan.  Any improvements can be deferred and the on-going responsibilities under the Action Plan will pass to the new owner once the sale has taken place.