Where a community-led housing organisation (or a group intending to set one up) is to be involved in an asset transfer from a public body, it will be important for both sides to be clear about having an appropriate and ‘fit for purpose’ legal framework which will not impact adversely on the transfer. This Section looks at the key issues.
- In addition to the specific legal and statutory issues (see 3.3, 3.4, 3.5, 3.6) directly relevant to land or building transfers, a ‘fit for purpose’ assessment of the CLH organisation proposing to receive a transfer should also be carefully considered. Councils should be aware of both the options available and the regulatory implications for the organisation, which will vary depending on its nature.
- Initial considerations should always commence with what the CLH organisation (proposed or existing) is to do, how it is to be funded, what is the most efficient legal structure (including tax) and who is to be involved in its governance
- For example, asset lock provisions contained within governing documents or entrenched Articles or Rules which tie in the use of the asset for the specified purpose should be considered. The Council may wish to review and consider such provisions for ensuring that the entity retains the CLH assets for the agreed purpose and that the provisions for disposal of assets or transferring assets out of the CLH organisation in the event that it ceases to exist provide adequate protection
- Not only would governance documentation be important here, both for protection of the assets and the individuals involved, including the level of involvement required (if any) by the Council, but the regulatory nature of the structure adopted should also be considered
- There are a number of resources available to help choose the right legal vehicle, including:
The table below provides a short guide to the legal structures most commonly associated with community-led housing organisations, charities and social enterprises. Other options are available, such as partnerships and limited liability partnerships, but these are not likely to be appropriate for such activities and so are not considered further within the scope of this note.