How can jointly owned property be sold if one owner lacks capacity to sell?

When a property is jointly owned, that property is considered as being held on a trust for the owners. This means that when the owners sell the property there has to be at least two trustees in place who can sign the transfer documents.

The trustees are normally the owners of the property. But if one of the owners no longer has capacity they cannot act as a trustee and sign the relevant papers. So what happens then?

If the owner who now lacks capacity (“P”) has previously registered a Lasting Power of Attorney (“LPA”) for property and financial affairs with the Office of the Public Guardian (“OPG”), then their registered Attorney can sign the documents on their behalf.

However, if no LPA was registered, the owner who still has capacity (who is known as the “continuing trustee”) will have to obtain the Court of Protection’s permission for a replacement trustee to be appointed.

To do this, the continuing trustee needs to make an application to the court setting out evidence of why the sale should go ahead and what will happen with P’s share of the proceeds of sale.

The application also needs to enclose a special undertaking signed by the continuing trustee and replacement trustee declaring that:

a) they will seek a fair and reasonable price for the property; and
b) they will deal with the proceeds of sale in the way in which the court directs.

The court’s permission is required to make sure that P is not taken advantage of. If the court grants permission, the continuing trustee can then sign a Deed of Replacement appointing the new trustee as a replacement for P. The replacement trustee will then be able to sign the transfer documents on behalf of P.

In most cases, the replacement trustee will be P’s Deputy for Property & Affairs. If P does not already have a Deputy, then the continuing trustee may consider making an additional application to have a Deputy put in place.

This process can take some time, as the continuing trustee will need to make the application, obtain the court’s permission and then sign the deed. So it is worthwhile thinking about this quite early on when considering to sell a property where one of the owners no longer has capacity.

If you are in this situation, or experiencing something similar, the Court of Protection team at Anthony Gold can advise and help you to make the relevant applications. We can also offer advice on the benefits of registering an LPA or the appointment of a Deputy.

If you would like further information on this topic please contact a member of our team on 020 7940 4000.