Non-exempt charities need to go through certain procedural steps before disposing of land (sections 117-121, 124 and 125 of the Charities Act 2011). This guide does not describe them in detail but they include, in most cases, taking advice from a qualified surveyor and, normally, advertising the proposed transaction. In the case of a charge to secure the repayment of a proposed loan or grant, the trustees must take advice on its necessity, its terms and the charity’s ability to repay on those terms and in the case of a charge to secure the discharge of any other proposed obligation whether it is reasonable for the charity trustees to undertake to discharge the obligation having regard to the charity’s purposes. When they have taken the prescribed steps then, provided that they have power under the trusts of the charity to make the disposal and the transaction is not in favour of a connected person (a term not confined to the trustees – see sections 117(2), 118 and 350-352 of the Charities Act 2011), the charity trustees or the charity can dispose of the land without an order of the Charity Commission or the court. In all other cases (subject to section 117(3) of the Charities Act 2011) such an order is required (which will be made by the Charity Commission, usually under section 105 of the Charities Act 2011).
Thus a disposition to an associated charity can take place at an undervalue if approval is first obtained from the Commission or the Court. An example would be where a charity is winding up, and transfers all its assets to a charity with similar objectives. There would not then be much point in being paid full whack.