Real Estate Gift Acceptance-University Policies - Carnegie Mellon University

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Real Estate Gift Acceptance

Policy Title Real Estate Gift Acceptance Policy
Policy Owner Vice President for University Advancement
Responsible Office University Advancement, Office of Gift Planning
Contact Information Questions concerning this Policy or its intent should be directed to the Executive Director of Gift Planning in the Division of University Advancement; 412-268-1948.
Pertinent Dates This Policy was approved on January 31, 2017.
Approved By The president of Carnegie Mellon University.
Who Needs To Know About This Policy The Policy governs Carnegie Mellon University employees and volunteers. It also serves as a guide for prospective donors and their advisors, providing assurance that all donors are treated equitably.
Definitions n/a
Forms / Instructions n/a
Related Information Gift Acceptance, Counting, and Reporting Policy
Reason for Policy / Purpose The purpose of the Real Estate Gift Acceptance Policy is to provide a set of standards by which real estate gifts are reviewed and accepted by Carnegie Mellon University.
Abstract This Policy outlines real estate gift acceptance at Carnegie Mellon University. It provides general information about gifts of real estate to the university; the Real Estate Gift Review Committee; the preliminary due diligence process for gift acceptance; gifts of real property with a retained life interest; gifts of real estate in new jurisdictions; final approval/acceptance conditions; and post-approval.

Policy Statement

  1. Introduction
    1. A gift of real estate can be a good way for a donor to support Carnegie Mellon University’s education and research mission. The university will make reasonable efforts to accommodate donors who wish to make such gifts.
    2. For proffered gifts of real estate, the Executive Director of Gift Planning will work with the donor to investigate the range of potential options for making the gift to help determine which approaches may be in the best interest of both the donor and the university.
    3. Gifts of real estate require careful advance review and planning. All gifts of real estate must be reviewed and approved in accordance with this Real Estate Gift Acceptance Policy and related procedures, which require the donor to provide and the university to obtain detailed and specific information about the real estate. This enables the university to determine the feasibility of accepting the gift.
    4. In general, a donor is responsible for all expenses related to protecting his/her interests in gifts of real estate (such as obtaining a qualified appraisal). The donor is further expected to pay for all expenses associated with the university's due diligence process.
    5. In certain cases, the university may elect to bear the cost of conducting the due diligence necessary to accept a gift of real estate. In order to do so, the dean or officer who oversees the college or unit benefitting from the gift must request approval from the Vice President for University Advancement, including a rationale for why incurring such expenses is in the best interest of the university, and identifying which institutional funds will be used to pay such expenses. Proceeds from the sale of a gift of real estate may be used to reimburse due diligence expenses incurred by the college or unit receiving the gift, provided that there is no gift agreement term precluding this.
    6. A gift of real estate may be declined by the university if it is deemed unfeasible. Feasibility will be determined through the university's due diligence and review process and will be at the sole discretion of the university. The university may deem a potential gift of real estate unfeasible as a result of a number of factors the university must consider, including, but not limited to:
      1. Foreign ownership laws
      2. Estimated costs to evaluate and accept the real estate (exceeds a net value threshold)
      3. Environmental or other liabilities
      4. Condition of real estate
      5. Estimated carrying costs for the real estate (exceeds net value threshold)
      6. Lack of marketability of the real estate
      7. Low valuation of the real estate
      8. Tainted property
      9. Conflict of interest
  2. Real Estate Gift Review Committee
    1. The Real Estate Gift Review Committee (“Committee”), composed of the following members, will make final decisions on the acceptance of gifts of real estate.
      1. Vice President for University Advancement (chair)
      2. Vice President of Operations
      3. Vice President and General Counsel
    2. The Committee shall consult with appropriate colleagues in the divisions of University Advancement, Finance, General Counsel, and Operations in the execution of its responsibilities under this Policy.
    3. The Executive Director of Gift Planning shall serve as the staff contact for the Committee.
  3. Preliminary Due Diligence Process for Gift Acceptance
    1. The university gift officer working with the donor shall provide the Executive Director of Gift Planning with information about the proposed real estate gift, including:
      1. Owner’s name
      2. Address of the property
      3. Photographs of the property (if available)
      4. Recent appraisal (if available) or approximate value of the property using credible resources such as local real estate agent estimates or research tools
      5. Details of the proposed gift, for example:
        1. Proposed timing of the donation
        2. Whether the university is expected to assume any mortgages or tenant leases
        3. Whether the donor is willing to pay for all expenses associated with the university’s due diligence process
        4. Estimated costs of the transfer, including which costs the donor may be willing to pay (e.g., realty transfer, deed preparation, or similar settlement costs)
        5. Gift purpose, and whether the proceeds of the transaction will be used directly by the university or used in return for a life income gift arrangement
      6. Principal uses of the property by donor and related occupancy information (e.g., any tenants)
      7. Property zoning (e.g., commercial, residential, industrial, or agricultural)
      8. Survey of the property (if available)
      9. Copy of the owner’s deed to the property (and proposed deed from the donor to the university, if available)
      10. Any known liens or encumbrances (e.g., mortgages or easements)
      11. Copies of property tax statements and insurance information (if available)
      12. Copies of any tenant leases
      13. If a commercial property, any operating statements and estimates of carrying costs
      14. Any other information available regarding the property
    2. If the gift is associated with an oil and gas lease, the gift officer shall provide the Executive Director of Gift Planning with information about the proposed lease, including:
      1. General terms of lease offer, including represented party
      2. Legal description of the property under consideration
      3. Plat/tract map of the property
      4. Gift deed, mineral deed, executor’s deed, etc.
      5. Mineral owner’s report
    3. The Executive Director of Gift Planning will forward all information to the university office responsible for real estate, which shall then obtain additional information as needed, including but not limited to:
      1. Current real estate property assessment
      2. Zoning of the property
      3. Fair market value opinion
      4. Historical operating expense statements
      5. Lease or other contracts related to commercial properties
      6. Anticipated expenses of the transaction, including any donor concessions or gifts to offset university costs
    4. The Executive Director of Gift Planning will, in conjunction with the university office responsible for real estate, present preliminary real estate gift information to the Committee. The Committee shall either decline the gift or provide preliminary approval to continue to investigate the feasibility of the gift through additional required due diligence, including but not limited to:
      1. Title search
      2. Survey
      3. Environmental testing
      4. Independent appraisal
      5. Third-party consultants advising on local laws and regulations
      6. Request for further communication with the donor regarding assistance with expenses associated with the proposed gift
    5. Preliminary approval by the Committee does not constitute final gift acceptance until all conditions have been met.
  4. Gifts of Real Property with a Retained Life Interest
    1. A gift of real property with a retained life interest is a full transfer of the title of a personal residence or farm to the university, with the donor or other person(s) retaining use of the property for a term of years or for the life or lives of the donor and/or other person(s).
    2. Such gifts are subject both to the general conditions and to the guidelines for acceptance of outright gifts of real estate as set forth in this Policy. The agreement creating the life interest must provide, at a minimum, that the donor and/or life tenant will remain responsible for the payment of mortgages, taxes, insurance (property insurance with university as loss payee; general liability insurance with the university as additional insured; and other appropriate insurance as determined by the university); utilities; maintenance, repairs, and general upkeep; and all other costs associated with the property, unless other specific provisions are made for the payment of these expenses.
    3. Periodic proof of payment for applicable items and certificates of insurance may be required by the university from time to time.
  5. Gifts of Real Estate in New Jurisdictions
    1. There are many important factors to consider when the university evaluates a potential gift of real estate in a jurisdiction in which the university currently has no place of business. The university’s divisions of Finance and General Counsel will assist the university office responsible for real estate and the Executive Director of Gift Planning in identifying compliance issues and coordinating resolution with the appropriate internal departments.
    2. The university will often need to devote internal resources and/or engage outside consultants to assist the university in evaluating the laws, regulations, and requirements of the new jurisdiction. In addition to professional service fees for the evaluation, there may be additional costs to the university to maintain ongoing compliance with applicable laws, regulations, and requirements of the jurisdiction. Such fees and acquisition of additional resources should only be considered subsequent to receiving preliminary approval for the gift.
  6. Final Approval/Acceptance Conditions
    1. Following preliminary approval, the Executive Director of Gift Planning shall prepare a written summary of the gift proposal, in conjunction with the university office responsible for real estate, and submit it to the Committee. Among other relevant information, the summary will include:
      1. Description of the real property
      2. Purpose of the gift
      3. Appraisal of the property, which shall include the value of the university’s prospective interest in the property and its marketability
      4. Any potential for income, and an estimate of the expenses, liabilities, and carrying costs prior to disposition (and the related financial plan to cover any expenses, liabilities, and carrying costs in excess of income prior to disposition)
      5. Any environmental risks or problems revealed by audit or survey
      6. Any potential university use
      7. Any special arrangements requested by the donor concerning disposition (e.g., price considerations, time duration prior to disposition, potential buyers, Realtors or brokers with whom the donor would like the university to list the property, etc.)
      8. Disclosure of the existence of any and all mortgages, deeds of trust, restrictions, reservations, easements, mechanic liens, and other limitations of record
      9. Tax consequences of ownership
      10. The operational plan to manage the property until it is sold (e.g., inspections to evaluate the condition of the property, making any required or routine repairs, managing any tenants)
      11. The proposed sales plan, if any
      12. A draft of a negotiated gift agreement that will address relevant matters relating to the donation of the real estate, such as the purpose of the gift; form of the related real estate title transfer document (gift deed); timing of the transfer of the property; party responsible for payment of various title transfer costs; liabilities that the donor will retain and/or the university will assume in connection with the property; and similar matters. The mutually agreed gift agreement, once executed by the parties, will govern the terms of the donor’s donation of the real estate to the university.
    2. The Committee will then accept or decline the proposed gift of real estate. Any such acceptance shall be subject to such conditions or requirements that the Committee determines.
  7. Post-approval
    1. Upon the Committee’s approval, the Executive Director of Gift Planning will work directly with the donor to execute all necessary documents to complete the transaction.
    2. In general:
      1. Real estate gifts will be deeded directly to Carnegie Mellon University
      2. Title transfer (deed) and related documents are maintained by (and should be forwarded to) the university office responsible for real estate