A legal duty which would have forced every charity in Scotland to engage with the community each time they wanted to sell land has been dropped from the Land Reform Bill – but a replacement clause will still have an impact on the charity sector if enacted by the Scottish Parliament.

The duty as originally framed during the recent Land Reform consultation process was targeted only at charities. Every time a charity wished to dispose of land within its ownership, or to amend the use for which charity land was held, the charity would have been obliged to engage with the community before completing the sale or change of use. The Land Reform (Scotland) Bill ("the Bill"), introduced into the Scottish Parliament on 22nd June 2015, does not contain the charity-only duty, but instead creates a potential wider duty of community engagement.

Clause 37 of the Bill provides that the Scottish Ministers must issue guidance on engaging communities in decisions relating to land where those decisions may have an effect on communities. In doing so, the Scottish Ministers will have to have particular regard to"furthering the achievement of sustainable development". The guidance will be intended to encourage"better collaboration and engagement between land owners and communities" and before issuing guidance the Scottish Ministers will be placed under a duty to consult with such persons as they consider appropriate.

The Scottish Government's policy memorandum accompanying the Bill makes it clear that the Clause 37 provisions are intended to cover all landowners and not charities alone, but guidance issued under the legislation would be intended to assist the Office of the Scottish Charity Regulator (OSCR) in carrying out its charity sector regulatory functions.

Where there is a complaint or concern raised about a charity's compliance with the guidance on community engagement, OSCR would be under a duty to consider whether the charity engaged"appropriately" with the relevant community. If a charity did not in OSCR's opinion engage appropriately in the context of the charity trustees' 2005 Act duties, OSCR would then have to consider whether misconduct had been committed by the charity trustees. Misconduct can lead to the disqualification of charity trustees and to criminal sanctions in serious cases.

The policy document makes it clear that if the guidance is not followed by land owners, then this could also be used as evidence to support an application under the rules on community right to buy, and it is clear that larger land owning charities will be subject to a greater degree of scrutiny than those owning smaller areas of land.

The removal of the community engagement duty for all Scottish charities will provide some degree of comfort to smaller charities – but the Scottish Government's stated policy objective to introduce guidance which OSCR must have regard to, and which will have a bearing on charity trustees' legal duties, keeps community engagement firmly on the charity sector's agenda. Charity trustees of land owning charities need to maintain a watching brief on how these proposed law reforms develop.