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Education briefing - Back to school - revisiting reverters

  • United Kingdom
  • Education - Briefings

01-04-2019

Rittson-Thomas and others v Oxfordshire County Council [2019] EWCA Civ 200

Experienced developers working in the education sector will be aware of the rules on reverters and how they can impact on proposed schemes. However, those who do not regularly work in this area would be forgiven for missing the importance of these historic rules, based in a statute from 1841.

In short, where up to one acre of land was originally transferred to be employed for charitable educational purposes, if the land is no longer used to further that aim, ownership can ‘revert’ to the person who originally transferred it (or, as is usually the case, their estate). This can pose a significant risk for educational providers looking to sell off land and utilise the proceeds of sale.

The educational provider’s hands are not eternally tied; they can sell the relevant land without a reverter arising, so long as the proceeds of sale are applied for the purchase or improvement of another site to be used for the same specified purpose. This case has highlighted that timing is crucial when relying on this option to sell and that care needs to be taken to ensure that the educational use of the land originally transferred does not end too early.

In this case, the school vacated the land in question and moved into new buildings on adjoining land in 2006. The old land was then marketed and, eventually, sold in 2007. Although the old land had been physically vacant for over a year before it was sold, the Council’s longstanding intention was to sell it and use the proceeds to recoup the costs of the development of the new site. The Council argued that that this wider strategy meant that it was always holding and using the old land for the specified educational purposes (ie to be sold to help towards the new school site), such that a reverter could not have arisen when the land was vacated.

The Court of Appeal rejected this argument, finding that by keeping the land vacant pending a sale, the Council could not be said to have continued to use it for the specified educational purposes. Consequently a reverter had arisen when the school vacated the land in 2006 and the proceeds from the 2007 sale belonged to the successors in title to the original owner, frustrating the Council’s financial plans.

Despite the Court of Appeal recognising the need for a “broad and practical approach” and the operational difficulties the school would have faced in vacating and moving to a new site after or at the same time as the sale, this did not assist the Council. It could not truly be said that the site had continued to be used for educational purposes as was required by the statute, with the Court noting that, for this to be the case, some sort of active use of the land was needed.

•This case will be of interest to educational providers considering disposing of land and utilising the proceeds of sale.

•The purpose for which the land was originally transferred is key – if it was in any way educational, further investigations should be carried out to check if there could be a reverter. If there is any doubt, it may be possible to insure against this risk.

•The decision of the Court of Appeal in this case highlights the importance of timing and planning within educational providers’ wider disposal and redevelopment strategies. Many assume that the risks associated with reverters arise at the point of sale, but this case highlights that by the time of sale it may already be too late to mitigate those risks.

•In practical terms, it is common for institutions to need to vacate some time ahead of the sale of land. Careful thought should be given to how this will operate, so as to preserve the required continued use, ensuring that a reverter does not arise and that any sale proceeds can be used as intended.

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