Buying or selling a property is the most stressful aspect of modern life, worse than divorce, redundancy or bereavement, according to a recent poll.
The process is even more complicated when buying a home for someone who lacks mental capacity. You have to deal with the obstacles peculiar to this situation as well as the usual horrors involving the risk of gazumping, surveys, conveyancing, estate agents and difficult vendors.
This blog sets out the main hurdles to overcome and pitfalls to be aware of.
Who has the legal authority?
When a person lacks the capacity to manage their property and affairs and needs to buy somewhere to live, someone will need to do this for them. Who should this someone be?
If an attorney has been appointed using an Enduring Power of Attorney (EPA) or Lasting Power of Attorney (LPA), which has been registered with the Office of the Public Guardian, then the attorney will usually be allowed to buy a property on their behalf. The attorney will need to check that the individual has not included any restrictions preventing their attorney from buying or selling property.
If there is no attorney then someone, usually a family member, will need to apply to the Court of Protection to be appointed as a Deputy to look after the individual’s property and financial affairs.
Even if they already have a Deputy, it is very common for Deputyship Orders to include restrictions preventing them from buying or selling property the individual without specific authority. It is important to check the Order carefully. If the Deputy does need permission, then he or she will need to make a formal application.
The Court application, whether to appoint a Deputy or for an existing Deputy to be allowed to buy a property, will need to include an up-to-date assessment of the individual's mental capacity, details of their finances and reasons why the purchase is in their best interests.
The Court process can take a very long time, typically more than six months. This can obviously be really tricky when buying property where there are tight deadlines and delay could cause the purchase to fall through. It is usually best to be up front with the seller about this from the start.
In theory it is possible to ask the Court to ‘fast track’ an application. This procedure is usually reserved for health and welfare applications which are genuine ‘life and death’ situations. There is therefore no guarantee that an application to buy a house will make it to the top of the pile.
Does the property need to be adapted?
Lack of mental capacity often coincides with physical disability – particularly where the individual has a brain injury or is elderly. In which case, it is likely that the new property will need to have adaptations, such as widened doorways, ramps, wet rooms and ceiling tracks for hoists.
This means there are even more things to think about:
- The Conveyancing solicitor handling the purchase needs to check very carefully to make sure there are no restrictions on the title at the Land Registry which could affect the proposed works;
- Works may require planning permission and it may be necessary to make the purchase conditional on obtaining permission;
- If the property is leasehold, the freeholder’s consent may be needed before embarking on any work. It might be sensible to speak with the other leaseholders in the building to let them know why the work is necessary and get them on side.
Another issue is that these works can take a very long time to complete – it is not uncommon for big projects to take around a year. The individual will need somewhere suitable to live while this is going on and this may mean renting.
It is not easy to find a private rental property suitable for a disabled person. Some work may be needed, for example ramps and ceiling tracks and so it will be necessary to negotiate with the landlord. The individual (via their Deputy or attorney) will need to offer to put the property back to how it was, at additional cost, and may need to offer a ‘sweetener’ such as six months’ rent in advance.
Who is the legal owner?
If the individual is an adult, the Land Registry will show them as the legal owner. Consideration should also be given to placing a restriction on the title preventing the property from being sold without a Court of Protection Order. This is to protect the individual in question.
If the individual is a child, they will not be able to hold property in their own name. The property will need to be held on Trust for them. The trustees, usually their Deputy and a parent, will have their names on the title at the Land Registry. This will be backed up by a Declaration of Trust showing that the trustees are holding the property entirely for the individual's benefit.