An LPA and joint property – what you need to know

On behalf of Attwaters Jameson Hill posted on Monday, February 12th, 2018

It’s quite common for couples each to appoint their partner as their attorney under a Lasting Power of Attorney (LPA) for property and financial affairs. Although it’s obviously a very sensible move to put an LPA in place when people still have the necessary mental capacity to do so, there can be issues for husbands and wives and civil partners when it comes to operating under the powers contained in an LPA and disposing of jointly-owned property.

 

If a jointly-owned property needs to be sold

Problems can occur if one partner loses mental capacity and the jointly-owned property needs to be sold. Unfortunately, the situation can become quite complex when this occurs. If, for example, the husband has lost mental capacity and the wife is the husband’s only attorney under the LPA, this effectively means that the property is owned by the wife in her own right, but she also has authority to deal with the sale of the property as attorney for her husband, meaning that there aren’t two separate trustees involved. Quite simply, when two or more people own real property together they are referred to as the ‘trustees’ of that property. As there is a legal requirement for a sale of property held on trust to be sold by two trustees, the owner cannot sign the transfer in their own right and as an attorney for the owner who has lost capacity, meaning that the property cannot easily be sold under the LPA.
 

Appointing additional trustees

The way to resolve this situation lies within the Trustee Delegation Act 1999. The attorney can work around this problem by appointing another trustee of the property (in addition to the other joint proprietor) solely for the purpose of dealing with the property transfer.

There is provision under s.40 of the Trustee Act 1925 to create a deed of appointment or retirement that automatically vests the trust property in a new trustee. Creating a deed of appointment vesting the property in the new and continuing trustee jointly, will be sufficient to allow the property transfer to proceed. The Land Registry will require sight of a copy of the deed of appointment in order to accept the transfer. Once the property is owned by two parties, the wife and the new trustee, it can be sold.
 

Forward planning

A way to avoid this issue arising in the first place would be for each owner of a joint property to either appoint different attorneys, or two attorneys with the power to act jointly and severally, for example, their spouse and another person. That way, there would be two different trustees available to sign the transfer deed and sell the property, and delays to the sale could be avoided.

This underlines the need for husbands and wives to give thought to who they should choose to act for them under an LPA, especially when it comes to dealing with jointly-owned assets like property.
 

Here to help

Our Wills, Trusts & Probate team are on hand to answer any questions you may have. Please call us on 0330 221 8855, or contact us online.

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