Property swap issues for academies

When converting to an academy, there are aspects of property conversion that can often prove more difficult than might be expected, writes John Steel

Many schools do not have comprehensive records about the ownership of their site. It is often the case that the school property is not held in the correct ownership, often because the property has not been properly transferred on the previous occasion that the school has changed status.

The first task in the conversion process is to investigate the title and establish the liabilities that apply to the title. This is important for three reasons:
• to make sure that everything that should transfer to the academy does transfer;
• to satisfy the Department for Education; and
• to ensure that the academy trust knows what property rights and liabilities it is taking on.

The investigation stage requires an identification of the site, establishing who owns it, locating the title deeds or checking the title at the Land Registry, establishing who is in occupation of the school property and undertaking searches to identify such potential issues as planning, drainage and water, environmental, chancel repair and coal mining liability.

Who is the owner?
These investigations may reveal a number of problems. Examples could be that the site is held by a different person or body than should be the case and that current occupants have no written agreement to allow them to do so. Common areas of difficulty are caretakers’ houses and jointly used facilities such as sports centres and leisure centres.

It is important also to establish the financial history of the property and, in particular, who provided the site originally and on what terms, who paid for the buildings and whether there is any possibility that the site will revert to the ownership of a third party if the use changes. In particular, it is important to identify what property has been publicly funded and what has been privately funded.

Which category?
Once the background details have been gathered together, it is necessary to consider how the academy trust will occupy the site after conversion; this will depend on the category of the school that is converting.

Although the Academies Act 2010 refers to property "transfer" on conversion, the academy trust may either take a transfer of a freehold interest or a transfer of an existing leasehold interest or be granted a new lease. In other circumstances, there may be no "transfer" as the academy trust will continue to occupy the school site under a licence agreement.

While the Secretary of State has power to make directions in relation to school property that is publicly funded, these powers do not apply to privately funded property. In the latter case, it is necessary to negotiate future arrangements with the owners or trustees of the property.

Finally, schools seeking to convert to academy status should be aware that the Education Bill 2011 amends the legislation contained in the Academies Act 2010. It is important, therefore, that those advising the school seeking conversion keep a close eye on the changing legislation.

John Steel is a partner in the Charities team at Blake Lapthorn. John can be contacted on 023 8085 7035 or at john.steel@bllaw.co.uk.

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