Section A – Introduction and Brief Description of Roles
You have received instructions to act in relation to the sale of charity property held on the Model Trusts of the Methodist Church (Model Trusts) in Scotland. Whilst you have been instructed by the managing trustees (Managing Trustees) of such property (Property), the Trustees for Methodist Church Purposes (TMCP) hold legal title to the Property as Custodian Trustees. Please read these guidance notes carefully as they contain important information about the Methodist law, policy and best practice requirements that must be fulfilled and the procedures that must be followed when acting for Managing Trustees.
A1 Your role
Your clients are relying on you to ensure that their transactions are managed in a way that has due regard for these requirements so that the matter can proceed to conclusion as smoothly as possible. Your clients are charity trustees meaning that they have to comply with higher fiduciary duties in dealing with the Property than you may be used to with your commercial clients.
This Guidance Note has been prepared by lawyers on how the Methodist and trust law requirements placed on Managing Trustees in England and Wales apply in Scotland. Your clients are relying therefore on you to ensure that any additional obligations on them under Scots law as charity trustees disposing of charitable assets are fully accounted for.
A2 Your client
Your clients are the managing trustees and charity trustees of the property being disposed of.
Please ask your clients, the Managing Trustees, to confirm the name of the relevant managing trustee body to which they belong. Usually the managing trustee body will be the local Church Council or Circuit Meeting. You may however be instructed by the District Trustees. Clarification of this point will enable you to draft the legal documentation correctly.
A3 TMCP’s role
TMCP is a body corporate, established under the Methodist Church Act 1939 and are Custodian Trustees in whom legal title to the Property is vested. TMCP has no beneficial interest in the Property. TMCP holds the legal title on trust for the Managing Trustees. TMCP is obliged to concur with and act upon the lawful instructions of the Managing Trustees to enable them to administer the charity effectively. It is the Managing Trustees who have responsibility for the day to day control and management of the Property. The Managing Trustees are the charity trustees.
The role of TMCP Legal in relation to the proposed sale is to ensure that Methodist law, policy and best practice requirements and procedures relating to the sale of property held on the Model Trusts have been met, that the transaction TMCP is being asked to enter into is otherwise lawful, not in breach of trust and complies with Methodist procedures and best practice. By looking at the transaction as a whole we can help you to ensure that it is in the best interests of the Managing Trustees. If you would like any further guidance to help you achieve this please do not hesitate to contact TMCP.
As the Managing Trustees are legally bound to sell when Missives are concluded, TMCP’s approval is required before the Qualified Acceptance is issued. Please ensure that the following steps are fulfilled and forward evidence of this to TMCP before issuing the Qualified Acceptance.
The Qualified Acceptance must not be issued until TMCP has confirmed that all the charity law and Methodist law, policy and best practice requirements for the transaction have been satisfied. You should not proceed to issue the Qualified Acceptance until we confirm TMCP’s approval to proceed.
B1 District consent
The sale should be logged as a “project” on the Methodist property consents management system (Consents Website). This is the responsibility of your clients, the Managing Trustees. Once the project is logged, the necessary Methodist consents will be entered. Please note that the consents entered here are quite distinct and separate to the approval of TMCP. The final consent required is usually but not always, that of the District, which must be in place before TMCP can agree to Missives being concluded. The sale will usually have been logged as a project before you are instructed and the Managing Trustees, your clients, will be able to keep an eye on when final consent has been entered.
B2 Surveyor’s Advice
The Managing Trustees need to obtain surveyor’s advice before marketing the property and this must be submitted to TMCP for approval. If this requirement has not already been fulfilled, please ask your clients to address this immediately.
The surveyor’s advice must have been approved by TMCP before we can agree to Missives being concluded. We need to be confident that the surveyor’s recommendations have been followed. Any departures will require the surveyor’s confirmation that such variations are in the best interests of the charity. Please refer to TMCP’s guidance note Obtaining Surveyor’s Advice (Scotland) which details the requirements for the surveyors.
If the surveyor’s advice will be more than six months old by the time Missives are concluded, TMCP will require written confirmation from the Managing Trustees' surveyor on the firm’s headed paper that the advice and contents of the original surveyor’s advice remain valid or for the surveyor to provide an update to the original advice.
B3 Best Price Certificate
The Managing Trustees must obtain a letter signed by the surveyor who prepared their surveyor’s advice referred to in Section B2 of this Guidance Note confirming that (1) the Property has been properly marketed and (2) that the agreed sale price is the best price reasonably obtainable for the Property. Please ensure that a copy of this is sent to TMCP before issuing the Qualified Acceptance. This is a requirement under Model Trust 16(1)(b). Please refer to the relevant section of Part 2 of the Constitutional Practice and Discipline of the Methodist Church for details.
Note that comments such as “the sale price represents fair market value” or “this is a reasonable price to pay in the current market” will not be acceptable. The surveyor must confirm, assuming they are able to, that the price and sale terms are the best reasonably obtainable. If the surveyor cannot do this, do they believe that the Property should be remarketed or that the sale should be delayed or otherwise?
B4 Approval of documents
The Qualified Acceptance, any further Acceptances and sale Disposition must be approved by TMCP before approval can be given to conclude Missives.
Please ensure that you include the Sale Template Clauses (Scotland) before sending documentation to TMCP for approval.
Please note that the Sale Template Clauses (Scotland) are available in a format so that you can copy and paste the template clauses into the documents making only amendments necessary to take account of differences in terminology between your precedent documents and the template clauses.
You need to send the draft documents to TMCP as soon as possible and contact TMCP if you have any queries. Ultimately the Managing Trustees are relying on you to ensure that the documents are drafted correctly and are in the best interests of the charity.
Authority to sign - TMCP will need to seal and two of its Board Members will sign the Disposition as set out in the Sale Template Clauses (Scotland) template execution clause. Two Managing Trustees will sign the Disposition with the authority of the rest of the Managing Trustees by resolution pursuant to Model Trust 16(1)(n) (Please refer to the relevant section of Part 2 of the Constitutional Practice and Discipline of the Methodist Church).
B5 Real Burdens
It is not a Methodist requirement for conditions relating to alcohol, betting and gambling etc to be imposed on the sale of Model Trust property. It is a decision for the Managing Trustees. If the Managing Trustees do want to impose such burdens and you have advised them that this is appropriate from a legal perspective, please notify us as soon as possible as we will need to obtain Connexional consent to the imposition of such burdens under Standing Order 943(3). (Please refer to the relevant section of Part 2 of the Constitutional Practice and Discipline of the Methodist Church). This is an additional consent that must be in place before TMCP can agree to Missives being concluded.
Section C - Concluding Missives
C1 Approval to Conclude Missives
Missives cannot be concluded until approval has been given by TMCP Legal. Approval will be given when TMCP’s legal officers are satisfied that all the requirements set out in Section B have been fulfilled.
C2 Agreeing the Date of Entry
When agreeing a date of entry with the buyer please bear in mind that TMCP require at least 10 working days to allow sufficient time for the TMCP Board to seal the Disposition and for TMCP Legal to procure the necessary Memorandum of Consent to the sale from the Methodist Council under Model Trust 26. Availability of signatories at short notice cannot be guaranteed.
Section D – Before Settlement
D1 Requirements before settlement
Once Missives have been concluded, please let TMCP Legal have the following before settlement:
- confirmation of the agreed date of entry;
- copy Qualified Acceptance and any further Acceptances to place on TMCP’s file;
- engrossed approved Disposition for sealing by the TMCP Board; and
- State for Settlement for approval (please see Section D2).
D2 Permitted Deductions
Please note that the only deductions that should be made from the sale proceeds before the sale proceeds are transferred to TMCP (see Section E) are those permitted under Methodist Standing Order 916. In short, permitted deductions include legal and surveyor’s fees and any other costs incurred directly as a result of the sale of the Property.
Please forward a draft State for Settlement as soon as possible. This process aims to avoid you having to account to TMCP for unauthorised sums already paid out to Managing Trustees or third parties.
D3 Disposition and Memorandum of Consent
TMCP Legal will send the sealed Disposition and signed and dated Memorandum of Consent to you once these are available.
E1 Sale Proceeds
The sale proceeds, less authorised deductions only (see Section E2), must be paid over to TMCP under Methodist Standing Orders. Such proceeds will be held by TMCP as Custodian Trustees on behalf of the Managing Trustees.
The net proceeds of sale should be sent to TMCP Finance by BACS Transfer no later than the next working day after the day on which your firm is in receipt of cleared funds. Please send confirmation that the monies have been sent to TMCP so that we notify TMCP Finance to expect the funds.
E2 TMCP’s Bank Details
TMCP Legal will confirm TMCP's bank details by post. Although TMCP Legal can send details by encrypted email in an emergency this should be avoided if possible.
E3 Completed Disposition
Following settlement please send to TMCP Legal a certified copy of the completed Disposition for our records.
If you have any queries in relation to the guidance in this document please contact TMCP Legal for further assistance.