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Mortgaging Charity Property

Trustees no longer need the consent of the courts or of the Charity Commission to allow land belonging to their charity to be mortgaged, provided that they obtain and consider proper written advice.

Previously, trustees needed the authority of the courts or of the Charity Commission to grant a mortgage over their charity’s land. An exception was where trustees were granting the mortgage as security for the repayment of a specific loan, and had obtained and considered proper written advice.

Under the rules governing mortgages for which consent is not required, trustees must comply with the following requirements:

In the case of a mortgage to secure a loan or grant they must obtain and consider proper advice given to them in writing on whether the proposed loan or grant:

  • is necessary for the particular course of action;
  • is appropriate in terms of the status of the charity; and
  • has interest and other charges that are reasonable and that the charity can afford to pay.

In the case of a mortgage to secure meeting the demands of any other proposed obligation, they must obtain and consider proper advice on whether it is reasonable for them as trustees to take such an action, having regard to the charity’s purposes.

For more information about mortgaging charity property and ensuring that the rules are applied correctly in order that consent is not required, speak to our Charity Team today.


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