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The use of lasting powers of attorney in issues with property

View profile for Jill Rushton
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Dementia awareness week 2018 - 21st-27th May

With a large increase in the number of instructions to prepare lasting powers of attorneys (LPA) for our clients we are often called upon by our colleagues in the residential conveyancing department to provide them with help and guidance on their usage throughout the conveyancing process.

This area often causes a lot of confusion for the donors (the person making the LPA) and the attorneys (the person appointed in the LPA’s).  and we are often asked for advice on what an attorney can and cannot do on behalf of the donor in relation to property. 

Put simply, your attorney has the power to buy and sell property on your behalf. This is of course subject to any preferences and instructions the donor may give them in the LPA. 

A very important point to note is that an attorney cannot use their position in any way to benefit themselves. This is important where the child of a donor is also the attorney and it is proposed that the donor will provide funds towards the addition of a “granny flat” at the property in which the attorney lives thereby adding more floor space and increasing the value of the attorney’s property. It is these common type of decisions that create issues for residential conveyancers and lead to applications to the Court of Protection being made to have such “gifts” approved prior to the works being carried out. This carries fees for the court and could lead to delays depending on the court’s timescales.  This can lead to frustration for all parties involved. 

Another important consideration is where a married couple own their property jointly. This is absolutely the norm for most married couples and it is worth noting how the property is held, whether as joint tenants or tenants in common. The distinction is important to note as where a married couple own the property as joint tenants when one of them passes away the property is passed automatically to the surviving owner by survivorship.     

Where the property is held as tenants in common, each co-owner has a distinct half share. On death, that half share doesn’t pass automatically to the survivor but under the terms of the Will or, where no Will is left, in accordance with the intestacy rules.

The biggest problems are usually caused with this type of ownership as sometimes both of the married couple lose capacity. The jointly owned property then needs to be sold, and both husband and wife have appointed the same person as their attorney (usually their child). A single attorney cannot sign a property transfer deed on behalf of both the owners. Practically the attorney will need to appoint a second person to join in the sale. This is done again through the Court of Protection and carries fees and could lead to delays again depending on the court’s timescales. 

To avoid such issues arising we recommend that the couple each appoints a different attorney (where possible), or appoints two or more persons to act 'jointly and severally' as their attorneys so that two names are available for the property transfer deed to be signed. 

The need for two signatures on a property transfer deed where jointly owned property is involved isn’t limited just to attorney situations. If one owner loses capacity, the other will similarly need to appoint another person to join in the sale in the absence of an LPA.

If you would like further information on making an LPA or an application to the Court of Protection or would like to discuss this further with one of our specialists, you can contact our Wills & probate team on 0175 321 6399.

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