Over one million Powers of Attorney are registered in England & Wales every year, with the most significant asset attorneys need to deal with often being the donor’s home. However, many attorneys may not fully understand what is required of them when it comes to selling another person’s property, which could result in problems further down the line.
What are Lasting Powers of Attorney?
There are two types of Lasting Powers of Attorney (“LPA”) in England & Wales: “Property & Financial Affairs” and “Health & Welfare”. Both are registered at and overseen by the Office of the Public Guardian.
Under a Property & Financial Affairs LPA an individual, “the donor”, grants authorities over bank accounts, property and investments etc to their “attorney(s)” to make decisions on their behalf, usually only in the event that they have lost the mental capacity to make those decisions themselves.
Does the LPA provide sufficient authority to sell property?
A Property & Financial Affairs LPA by itself may not provide sufficient authority to sell / make a gift of a donor’s property. We encourage all attorneys to:
- Check what instructions and preferences are contained in the text of the LPA document itself, since this is customisable
- Consider whether the donor has a Will which contains instructions regarding the property and review how the proposed sale or disposal may affect this (subject to donor consent)
- Review who the property is being sold or given to, and at what price
We also urge all attorneys to remember that, with limited exceptions, they are not normally allowed to:
- Give property to themselves or others as gifts, or
- Sell property at lower than the market value
without first obtaining authority from the Court of Protection.
Seeking court authority
Where court authority is required to gift or sell property at an undervalue the attorneys must make an application to the Court of Protection seeking permission. The application must include all relevant information and demonstrate that the attorneys are acting in the donor’s “best interests”, a concept not specifically defined in the legislation. Attorneys should also be ready for lengthy delays at the Court.
If the property is held in joint names the matter can be even more complex requiring a different application to the Court.
Without a court order authorising the transaction, HM Land Registry could refuse to complete a registration of transfer of the property.
For further information or enquiries please contact our Private Client Court of Protection team on 01775 661917 or send me an email.