When a couple is thinking about making an LPA for their property & financial affairs it is quite common for them to want to appoint each other as their attorneys. Often, they want to appoint each other as sole attorneys initially. While they may be happy for their children or other trusted people to act too, it is common that they only want them to act if the spouse becomes unable to. This is usually a sensible enough approach, but there is one small issue that clients should be made aware of. There can be difficulties if the property needs to be sold after an owner has lost capacity.
What is the issue?
Trusts are pervasive in English & Welsh law. While it is not something we tend to consider in our day to day life, it is a fact of land law that every property that is jointly held is held on a trust of land. The joint owners of the property hold the property as trustees, in most cases on trust for themselves either as joint tenants or tenants in common.
Where a property is held on a trust of land at least two trustees are required to give good receipt for any capital arising from its sale. This is where we face problems with joint owners of property appointing each other as their sole attorneys. Two distinct signatures are required on the transfer documents, so an attorney cannot sign both for themselves in their capacity as a trustee, and also for the incapacitated owner in their capacity as their attorney.
How is this resolved?
The attorney will be the continuing trustee as they are still a capable co-owner of the land. Where the attorney is a continuing trustee the Trustee Delegation Act 1999 allows them to appoint a new trustee to act with them solely for dealing with the property transfer. Once the property is held by two capable trustees it can be sold, as good receipt can now be given.
So, in reality it’s a minor nuisance and easily worked around but being faced with this issue unexpectedly as an attorney can certainly be daunting. If clients own their property jointly and wish to appoint each other as sole attorneys it is therefore best that they are made aware of this.
Of course, the easiest way to avoid this issue at all would be for them to consider naming an additional attorney to act alongside the other spouse. This way there would always be two separate trustees able to sign any transfer documents, as the joint owner could sign for themselves and the incapacitated owner’s other attorney could sign on their behalf. This avoids any panic or delays when it comes to selling the property after an owner has lost capacity.
7 comments
Kevin Samuel
21st May 2020 at 4:43 pm
Will the OPG be happy with the inclusion of an instruction on the LPA along the lines of “Attorney_Y (the child or other) may only act with regard to any future sale of my property whilst Attorney_X (the spouse or partner) is capable and willing to act as my attorney unless Attorney_X consents to Attorney_Y assuming wider powers.”
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Siobhan Smith
22nd May 2020 at 9:12 am
Hi Kevin,
I’m afraid the OPG wouldn’t register an LPA with that type of instruction as it contradicts the nature of a joint and several or a joint appointment. It’s not possible to state that an attorney may only act in certain decisions, or that they can only act if another attorney allows them to.
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Clare Datta
8th June 2020 at 10:36 am
Very useful piece of information – thanks Siobhan.
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Sian
24th September 2021 at 6:42 pm
Hi Siobhan.
How does this work in practice, is it something the conveyancer would deal with. Am I correct in thinking it will not require a COP application.
Thanks
Sian
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Siobhan Smith
27th September 2021 at 9:33 am
Hi Sian, in practice this is easy enough to work around and the conveyancer would assist by including an appropriate clause in the TR1 to appoint an additional trustee to work with the attorney on the sale. There shouldn’t be any need for a COP application unless there are other issues in play such as it being questionable whether sale is in the incapacitated person’s best interests.
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TenMinuteWill
31st January 2023 at 10:24 am
Hi Siobhan
Would another work-around be to make TWO LPAs?
In the first LPA, appoint only the other spouse and enter the Instruction: “This LPA must not be used for the sale of any property I jointly own with my spouse”
The the second LPA, appoint one or more Attorneys (NOT including the spouse) and enter the Instruction: “The LPA can only be used for the signing of any documents required to execute the sale of any property I jointly own with my spouse. My attorneys must not act on any other matter regarding my property and affairs”
Jon
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Siobhan Rattigan-Smith
10th July 2023 at 9:27 am
Hi Jon, that would work but seems an expensive work around for an issue that can be easily resolved at the point of the sale.
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