Board of Visitors minutes :: June 13, 1997 :: University of Virginia Library

The University of Virginia's Real Estate Gifts Policy covers issues related to accepting gifts which benefit the University of Virginia. The policy is intentionally brief so as to focus on the more salient issues related to cultivating, accepting, maintaining and disposing of real estate gifts. It is the desire of the University of Virginia that real estate intended to benefit it or its related foundations be given to the University of Virginia Foundation's real estate arm, the University of Virginia Real Estate Foundation (UREF). Once the real estate is liquidated, proceeds normally will be transferred to the University of Virginia, or one of its related foundations.

II. Internal Operations

Notification Process of Potential Gift

When a potential gift of real estate, outright or deferred, first comes to the attention of the University or one of its University-related foundations, the Planned Giving Office will be notified and given the opportunity to review the suitability of the asset for gifting purposes prior to the commencement of the due diligence process. This office will coordinate communications concerning the acceptance of the property within the University community and can assist in the solicitation and acceptance process.

Coordination Between UREF and UVA

The University Development Office, or the school/unit which is involved with a prospective gift, is responsible for all contacts with the donor and for notifying University personnel of the potential gift. Performance of due diligence will be managed by UREF. So as to not confuse donors and to reduce the number of University persons with whom donors must interact, UREF will work through the University Development Office or appropriate foundation, instead of working directly with the donors, in the management of its review.

UREF Management of Real Estate Gifts

All gifts should be made to the University of Virginia Real Estate Foundation (UREF). This foundation's purpose is to accept and manage properties on behalf of the University of Virginia. After a property has been deeded to UREF, UREF ensures that the property is managed properly, including paying annual taxes and property insurance, maintaining landscaping/facilities, renting the property, etc.

Pro-forma of Estimated Transaction and Carrying Costs, and Marketability

As a part of the due diligence process, UREF will develop a pro forma showing the estimated cost to receive, maintain, and dispose of the property. This pro forma, in addition to an analysis of the marketability of the property, is a crucial part of the due diligence process. Normally, it will be UREF's intention to sell properties as soon as possible. If it is determined that a property will not sell within a reasonable amount of time, or if the sales price will be significantly different from the donor's appraised value, the Foundation may choose not to accept the gift. Donors will receive an estimate of all transaction costs to accept, manage, and dispose of the property. This estimate would include those costs determined as necessary by UREF to put and keep the property in a condition to be marketed. The estimate will detail which costs would be customarily paid by UREF and which costs would be customarily paid by the donor as part of the transaction.

Minimum Review Time for Gifts

The due diligence process will take, at a minimum, 90 days. This means that the due diligence process for gifts must begin prior to October 1 if gifts are to be received in any calendar year. The 90-day minimum review period will not be accelerated unless the Executive Vice President and Chief Financial Officer of the University directs the Foundation to do so.

Minimum Acceptable Value

Any gift valued at less than $10,000 will be reviewed on a case-by-case basis to determine if the benefits of accepting the gift will exceed the cost of accepting and maintaining it.

Transaction Costs

Costs related to reviewing, accepting, maintaining, and disposing of real estate will be attributed to each individual gift. These costs typically may include legal fees, travel to review gifts, general due diligence, (e.g., market analysis, title search, environmental and building review), taxes, utilities, repairs, insurance, etc.

III. Donor Relations

Letter of Instructions

In those cases in which the disposition of the donated real estate or the proceeds from the sale thereof is not otherwise specified by gift agreement, trust instrument or endowment agreement, the appropriate development officer will have the donor prepare or will prepare for the donor's signature a letter of instruction specifying to whom and for what purposes the gift of real estate and/or its sale proceeds is made.

Legal and Tax Review by Donor's Counsel

Donors should be advised to obtain legal assistance and tax counsel in handling their gifts.

Transaction Responsibility

The development officer, working with the donor, will collect preliminary information using the "Proposed Donation of Real Estate Fact Sheet" to determine if the properties meet the minimum criteria for acceptance. Attached is a standardized report for this purpose. If the proposed gift meets the basic criteria as stated in this policy, that decision will be relayed by UREF to the Planned Giving office with the understanding that acceptance is conditional upon completion of the due diligence process.

Once the due diligence process is complete and the gift is deemed acceptable, UREF will coordinate the closing of the transfer with the donor's representative, usually an attorney or real estate broker. Unless otherwise specified by the donor, UREF legal counsel will prepare the form of the deed for review by donor's counsel and signature by the donor.

The Planned Giving office will coordinate the preparation of any charitable gift documents that may be required in addition to the deed.

As appropriate, documents will be reviewed by University and UREF legal counsel prior to closing.

Donor Follow-Up

With the exception of life estate gifts, once the gifts have been transferred to UREF, the donors will have no control over how the property is maintained or of the disposition process. If donors have questions regarding their gifts, they should contact the appropriate development officer.

IV. Transaction Process

Site Visits

In all cases, property will be inspected by UREF personnel, or a representative of L"REF, prior to acceptance.

Information Needed Prior to Approval

The following information will be needed before acceptance of a property can be approved. The collection of this information will be managed by UREF.

1) Evidence of clear title

2) Evidence of appropriate zoning and permits

3) Evidence of sufficient value and marketability

4) Evidence that the property meets minimum environmental standards

5) Building/engineering inspection as appropriate

6) Surveys as appropriate

Approval for Acceptance

Ultimate responsibility for accepting gifts resides with the UVAF Board of Directors. This acceptance authority can be delegated to the Executive Vice President and Chief Financial Officer of the University or the Chief Operating Officer of the UVA Foundation.

Debt

Real estate property which is encumbered by debt will be scrutinized more closely. There may be situations when the debt is so small and the likelihood of a quick sale is such that the property is accepted. These properties will be reviewed on a case-by-case basis.

Appraisal Process

The donor must obtain an appraisal to receive a tax deduction from the Internal Revenue Service. The appraisal must be performed by a licensed appraiser and must occur within 60 days before the gift is transacted and the due date of the donor's next tax return. UREF reserves the right to obtain its own appraisal in the event that there is some question regarding the marketability of the property. The Development Office will ensure that the donor provides UREF with a copy of any appraisal performed.

Environmental Review Process

The type of real estate will determine the level of environmental review required. In most cases a Phase I Environmental Assessment will be required. If there are improvements on the property, then further tests and sampling may be required to determine the presence of asbestos building materials or other hazards. In the event that a hazard is detected, an analysis of possible remediation efforts will be made.

Title Insurance

It is the policy of UREF to require an owner's title insurance policy on all real estate gifts. The cost of this policy can be reduced by incorporating information from existing policies, but UREF will nonetheless require that a new policy be in place.

V. Follow-Up

Internal Revenue Service Reporting (8283 & 8282)

The donor will be responsible for preparing an IRS Form 8283 detailing the value of the gift. UREF will be required to sign the form as the recipient. This form requires certification by a qualified appraiser of the value of the gift, and it will be the specific responsibility of the donor to designate an appraiser to provide this information. As a reminder, UREF will provide the donor with a copy of Form 8283 at closing.

Subsequent to the sale of the gift, UREF will submit an IRS Form 8282 detailing the sale price of the gift. The donor has no involvement with this requirement. As a courtesy. a copy will be provided to the Planned Giving Office and to the donor.

Gift Reporting

The University of Virginia Real Estate Foundation will notify the Planned Giving Office, which will notify the Director of Gift Accounting, at the time it receives a gift. This notification will include sending a copy of the certified appraiser's estimation of the value of the property. Others who will be notified may include the President, Executive Vice President and Chief Financial Officer, Vice President for Development, and the relevant development officer.

UREF will notify the Planned Giving Office in the event there is a change in the status of any property. At a minimum, UREF will prepare and submit to the Planned Giving Office a quarterly report detailing the status of all property gifts.

Maintenance/Management of Received Gifts

The University of Virginia Real Estate Foundation will exercise reasonable care in the maintenance and management of any gift. This will include periodic inspections by UREF, or its designated agents, appropriate preventive and routine maintenance, and safeguarding as necessary. In the event that the gift is an income-producing property, UREF likely will contract with a fee property manager for the management of the property until it is sold.

Disposition of Gifts

The University of Virginia Real Estate Foundation will take reasonable steps to market and sell the property at a value equal to or greater than the appraised value of the initial gift as expeditiously as possible. If this cannot be accomplished, UREF may choose to discount the property to a market level that will stimulate a sale of the property. UREF will notify the Planned Giving Office in those instances where a property is being sold at significant difference from the stated value of the gift.

Management of Real Estate Files

Complete files on all donated real estate will be maintained by UREF. These files are available to University and foundation personnel for review.

Listing Agreements

In most cases, UREF will procure the services of a licensed real estate broker to manage, market and sell the property. This will entail negotiation of commissions and creation of a listing agreement. Consideration will be given to brokers who already have been employed by the owner, but UREF reserves the right to select a broker based on sound business criteria. In general, UREF will not enter into listing agreements with duration of more than one year.