14 May
14May

Understanding joint ownership and LPAs is helpful, as they form the basis of this article. We recommend referring to other articles if you're unfamiliar with these concepts. 

Summary: To sell a property, a distinct signature is needed for each person who owns a share. The advantages of a professionally written LPA almost invariably outweigh the potential issues. 

How do LPAs work with property?

A Property & Finance (P&F) LPA attorney has the authority to purchase and sell property, manage bank accounts, handle investments, pay bills, and receive benefits or pensions.

When a couple jointly owns a property, and both become unable to make decisions, issues can arise if they have appointed the same person as their attorney. In such cases, a single attorney cannot sign a property transfer on behalf of both owners, so another person will need to be appointed to join in the sale. This issue can be avoided if each spouse appoints a different attorney or appoints two or more persons to act ‘jointly and severally’ as their attorneys. This ensures that two names are available for the property transfer document. It's important to note that the need for two signatures on a transfer deed isn't limited to attorney situations. If one owner cannot make decisions, the other must appoint another person to join the sale. Therefore, it is always recommended to have an LPA if your property is owned with someone else.

The technical bit: Under the Lasting Powers of Attorney and Public Guardian Regulations 2007, all jointly owned properties are held on trust for both owners. This means a legal requirement exists to sell any property held on trust: two Trustees must sell the property. 

Summary: If there are two owners, then two signatures are needed to sell the property. Solution: Each person should have two attorneys, e.g., their spouse/partner and one or two other attorneys, with the power to act jointly or severally, allowing for there always to be two people who can sign.

Scenarios

When a married couple co-owns property and has designated each other as LPA attorneys, one cannot sign the transfer of sale for themselves. Two distinct signatures are required as an attorney for the other, who has lost capacity. This is not a flaw but a protective measure for the interests of both owners and those who have lost mental capacity.

For selling property on behalf of a mentally capable individual: A person who is mentally capable but otherwise unable to manage their property sale can assign a Lasting Power of Attorney (LPA) for Property and Finance to someone else. The designated attorney can then manage the sale on their behalf.

For selling property on behalf of a mentally incapacitated individual: If a person is mentally incapable of managing their affairs and there is no existing suitable power of attorney, one can apply to the Court of Protection to become a Deputy or to obtain an Order allowing the sale.

Regarding selling a jointly owned property: Complications may occur during the sale if a property is co-owned and only one attorney has been appointed. To prevent this, each owner could appoint separate or two attorneys authorised to act jointly and severally.

Concerning the use of a General Power of Attorney: This type of power of attorney empowers the attorney to perform any act the principal could, including managing all financial matters and transactions, such as selling a house.

For selling property when the owner prefers not to make decisions: Sometimes, an individual may choose not to make decisions about selling their property. In these instances, they can designate a power of attorney to manage the buying and selling of the property for them.

CASE STUDY: Regarding Life Interest Trusts and LPAs, Chris and Nikki sever the tenancy on their home 50/50 and write a life interest trust into their Will. At the same time, they have P&F LPAs with each other as attorneys and their children as replacement attorneys. The children are from Nikki's previous marriage and are Chris's stepchildren. 

  1. Nikki loses mental capacity. Can Chris be forced out of the home by his stepchildren? The sale can't proceed without Chris and the replacement attorneys agreeing. The attorneys are legally obliged to always act in the interest of the Donor, in this case, Nikki. Therefore, if they had legitimate reasons to insist on a sale, they would have to take legal action and prove their case in court. The same would apply if they objected to the sale, but Chris wanted to proceed. Therefore, a potential whim or grudge would be insufficient to obstruct the wishes of other attorneys and property owners.
  1. If Nikki died, could the Stepchildren force Chris to sell or leave the house? No, because he has a life interest in the property to stay as long as the trust dictates, usually life. The LPAs for Nikki ceased to be valid on her death. 
  2. What if the attorneys disagree? If reconciliation is not possible despite best efforts, the court will make the final decision. The three actions to reduce this risk are: a) Carefully choose the attorneys, b) carefully and deliberately write the LPA, and c) have an accompanying statement of wishes.
  3. Do all attorneys need to sign? Whether all attorneys are required to sign depends on how the LPA was written, whether joint, joint and several, or joint for some and several for others. Typically, one distinct signature is required to represent each share owner of the property.

It's important to remember that the information provided here is a simplified overview and should not be considered legal advice. We strongly recommend seeking a personal consultation before making any decisions related to joint ownership and LPAs.

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