Reverters on property - a short history, how to identify it and can land still be sold?

History

The principle of a reverter has been common law since medieval times. In the mid to late 1800s, there was a drive towards both improvements in education and encouragement of philanthropy for charitable purposes. As a result, a lot of land was transferred between 1850 and the early 1900s for use as places of worship or for use as a school, library or museum. The reform in the law came in 1987 with the Reverter of Sites Act (the 1987 Act) which remains in force and governs this area of law, although modern reverters themselves are rare.

The transfers contained a right or covenant, that, should the land no longer be used for the purpose transferred, it would automatically revert back to the original donor, their heirs and successors. Following the 1987 Act, from the date the original purpose ceased, the land is held on trust by the current owners for the donor including all income received from the date the use ceased.

How to spot a reverter

This right can attach to land which was used for places of worship, education, library or museums and typically acquired since the mid 1800s. Reference to a reverter is not usually noted on the registered title at the Land Registry and therefore can be tricky to identify. The reverter is contained in the original transfer deeds which form part of the property deeds and can sometimes reference 'use as a church only' (for instance) or state that the transfer is made in accordance with the School Sites Act (1841-1852), Places of Worship Sites Act 1873 or Literary and Scientific Institutions Act 1854. One indicator is if there is historical knowledge that the site was gifted by a local family Estate or local wealthy benefactor.

What happens if there is a reverter?

A valid reverter can affect the value of land or block a sale. If it is suspected that land was gifted, before considering marketing of a building, we recommend that you check the deeds and obtain advice.

If the donor is known, then they should be approached to confirm whether they wish to enforce the reverter and for the building to be returned to them. Alternatively, they can choose to waive the right to the reverter or gift the land to the current owner, who would then be free to sell the land.
 
If the donor is not known or cannot be found or contacted, then reasonable investigations must be carried out, including a process for publishing notices. If no one comes forward, consent from the Charity Commission by way of a Scheme will be required for the sale and use of the completion funds.

For more information or advice, please contact Sarah Outram in our Commercial Property team.