Lasting Power of Attorney: Property and Financial Affairs

A Lasting Power of Attorney (LPA) can be appointed to handle another person’s property or financial affairs. Michelle Hawkins from our residential property team looks at the role of an LPA during the sale of a property…

A Property and Financial Affairs Lasting Power of Attorney (LPA) will have several very important responsibilities when carrying out their duties on behalf of another person during the sale of their property.

What is a Property and Financial Affairs LPA?

A Property and Financial Affairs LPA allows you to appoint one or another person who is trusted to make decisions on your behalf about your property and affairs at a time when you are no longer able to, or no longer wish to make those decisions yourself.

This can include paying bills, dealing with your bank accounts, pensions, and investments, collecting income and benefits, or even selling your house (subject to any restrictions or conditions you might have included within the LPA document).

Why would you appoint a Property and Financial Affairs Attorney?

You would need to appoint an Attorney if you felt you were no longer capable of taking care of your property or financial affairs, or that you knew you would not be able to do so in the future. You can only appoint an Attorney, however, while you are still capable of doing so.

You may appoint an LPA as you become elderly, you become ill, have an accident, or know that one day you will not have the mental capacity to make decisions for yourself, for example, you suffer a stroke or are diagnosed with Alzheimer’s or dementia.

Often people understand they will reach a point in their lives where they don’t feel they can deal with their property or financial affairs, and they need help from others to work through these issues.

My colleague Bernadette Polkinghorne has previously written a blog about why you would need to appoint an LPA.

Who can be appointed as an attorney and what is the process?

An attorney is usually, but not always, a family member. They could also be a close friend of the family. An Attorney can be anyone aged 18 years old or over and they must be a UK resident.

There are different types of Powers of Attorney but the main one is a Lasting Power of Attorney (LPA) – this role was introduced on 1 October 2007. Enduring Powers of Attorney created before this date still exist and are still valid. There is also a General Power of Attorney which lasts for a set period of one year.

An Attorney is appointed by the donor and must be drawn up while the donor still has capacity. A Power of Attorney is registered with the Office of the Public Guardian (“OPG”) and can be used straight away if required.

What does acting as an attorney in a property transaction mean?

A Property and Financial Affairs LPA acting in a property transaction means that they have been appointed by the donor and have the Donor’s authority to make decisions about the sale of their property.

What can an attorney do?

When acting as an attorney in a property transaction, an LPA can deal with all matters and take important decisions when selling the donor’s property.

The LPA will include a section that defines exactly what the attorney can do. If that section excludes the sale of the property or any dealings with the property, then the LPA cannot be used in this way.

Depending on the LPA set up, if the donor decides they can deal with all of their property and financial affairs, it allows the Attorney to sell the donor’s property. However, it is crucial that the Attorney always acts in the best interests of the donor – this means that any action they take in relation to property must always be for the benefit of the donor.

They have the power to act on the donor’s behalf and usually, but not limited to, sign documents, provide instructions to the solicitor, negotiate, and agree the purchase price of the property, and decide which contents of the property will remain and which will be removed.

Most importantly the Attorney should have a dedicated bank account set up to receive the net proceeds of the sale of the property (an entirely separate bank account from their own). They can also process the net proceeds of the property sale for the use of care home fees.

The proceeds cannot be used for anything but the benefit of the donor – in other words, the money cannot be taken for the Attorney’s personal use.

Property transactions

Once the decision to sell the property is made the transaction can start to take place as long as the Lasting Power of Attorney has already been drawn up, agreed, and registered with the OPG.

The contract for the sale of the property is drawn up in the name of the donor, but the attorney will act on their behalf and therefore, the attorney will sign the documents.

A conveyancing solicitor will need to check that the Lasting Power of Attorney has been registered with the OPG and will also need to obtain identification from the Attorney who is acting for the property transaction.

Once this has been done, the property transaction can proceed.

Other considerations

When setting up a Property and Financial Affairs LPA, there is an option for the attorney to start managing affairs straight away, or only when the donor has lost the capacity to do so.

If the donor has already lost capacity, then an LPA cannot be entered into and an application will need to be made to the Court of Protection for an order allowing the property to be sold, which can be expensive and take quite some time to obtain.

Very often we find that only one attorney has been appointed. It is a good idea to have at least two attorneys in case this is needed.

There is another section in the LPA which defines whether the attorneys can act together or separately, or they must only act together. If it’s the second option, all decisions must be made by both attorneys.

Think ahead

The important thing is to think ahead and plan, to act sooner rather than later.

Provide a copy of your Power of Attorney to your conveyancing solicitor as soon as possible so that they can check it to confirm the provisions set out in the LPA. This will help to minimise delays in the process of a property transaction.

More information and advice

Coodes has produced a guide on Powers of Attorney which you can download from our website here. The Office of the Public Guardian has created a guide for how to be an attorney in property and financial decisions which is available to download online. More information can also be found on the government’s website about LPAs.

We would always recommend that you get advice from a qualified and experienced lawyer in relation to all matters involving Lasting Powers of Attorney and property transactions.

To get in touch with the team at Coodes Solicitors, please use our online form or give us a call on 0800 328 3282.