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Mental capacity – selling a jointly owned property

New guidance outlining what to do if somebody you own a home with loses mental capacity, and a deputy for property and affairs has to be appointed on their behalf, has been issued by The Office of the Public Guardian.

When two or more people own land or a house together they are referred to as 'trustees' of that property but crucially, if one person becomes incapable of managing their own financial and property affairs, they will not be allowed to sign any legally binding documents dealing with that property.

Consequently, if the property needs to be sold it will be necessary for a separate application to be made to the Court of Protection for an order appointing someone to replace the incapable trustee.

This is known as a Trustee Act Order and will be required by the conveyancing solicitor and the Land Registry.

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This is different to cases where the person who lacks capacity has an attorney under an Enduring Power of Attorney or Lasting Power of Attorney - it is only deputies (not attorneys) that need to obtain a Trustee Act Order from the Court.

It is therefore advisable that if a couple own a property jointly, and there is a risk that one or both may need to move to a care home, that they put Lasting Powers of Attorney in place when they have capacity to do so.

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Selling a property as Deputy to a family member

Often the need for a deputyship for property and affairs arises when a family member goes from living in their own home to a care home.

If they lack capacity to make a Lasting Power of Attorney and do not have mental capacity to sell their property, somebody must be appointed to deal with this on their behalf. Often a property sale is urgent to ensure the ongoing payment of care home fees, which can be very expensive and quickly erode savings.

A standard deputyship order will usually give the deputy authority to sell the property if the property is vacant and is held in the sole name of the person who lacks capacity.

But what happens if the deputy wants to buy the property or sell it to another family member at less than full market value?

Selling the property to a family member may be an option more families wish to explore given the current uncertainty in the property market.

For example, Wards Solicitors' recently applied to the Court of Protection to obtain an urgent order authorising a sale by a lay deputy of her father's property to her own son at slightly less than the market value indicated by estate agents.

The Court agreed with our application that this was justified and in the father's best interests because he was saving estate agent fees, helping his grandson get on the property ladder - which he would have wanted - and avoiding the uncertainty of keeping the property on the market for an unknown period.

In another case, Wards Solicitors' is applying to the Court requesting authority for a deputy to sell his mother's property to her sibling (who is co-deputy) in circumstances where the only offers made on the property were withdrawn due to the uncertainty of the property market.

In this case, because the sale is to a deputy, the Court needs to make sure there is no breach of this individual's fiduciary duties - the highest standard of care and utmost trust and confidence to manage and protect property or money placed on them.

Help and guidance

As well as assisting with these applications, we can advise on the related issues of interim funding that may be available from the local authority pending sale of the property, what benefits should be applied for and NHS continuing health care funding (where the NHS pays the care fees).

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