Donor beware: Section 10 is not your friend
Howard Epstein sheds light on the risk of power of attorney property fraud
In June 2019, Wales Online reported that a disbelieving Angela Ellis-Jones had returned home from holiday to the unnerving discovery that her post was being diverted to a third party. She took steps to ensure that her snail-mail would reach her. However, two months later, some truly hot mail arrived – and she discovered that the theft of her mail was the least of her problems. She received from HM Land Registry a form entitled Completion of Registration – stating that her now home belonged to a total stranger (walesonline.co.uk/news/wales-news/house-theft-stolen-land-registry-16452180). That story is merely the hors d’oeuvres. The main course is rather meatier.
How could this happen?
Why forge only a transfer of property when you can go the whole hog and forge an “authority to do on behalf of the donor anything which he can lawfully do by an attorney”? Those are the words of s.10 of the Powers of Attorney Act 1971 – and the form of such a general power is set out in Schedule 1 to the Act. It could not be simpler: the template consists of a mere 42 words. Fill in the blanks, sign as a deed, have it witnessed in another name, and away you go – empowered to draw on a bank account, sell stocks and shares, raise money on a mortgage and, of course, sell real property.
Truth stranger than fiction?
In my novel, The Compartmentalist, the central character, a solicitor, creates such a general power of attorney (It is not an autobiographical work, I might add.) The donee is the solicitor himself, the donor an alter ego he dreamed up, and the witness another character in the story, who remains ignorant of the use of her name – and of her supposed signature. This set me to thinking about the risks we run under the laws of England and Wales, with the need for one witness only upon a general power of attorney. No verification of the existence of such a witness is required.
As long ago as June 2018, the Law Society Gazette published an article entitled: ‘“Abuse” warning as investigations into power of attorney surge’ – but that was concerned with Lasting Powers of Attorney, which require a certificate to be given by a ‘certificate provider’ – who must either have relevant professional skills, such as a doctor or lawyer, or be a friend or colleague who has known the donor well for at least two years. The certificate is to the effect that no-one is forcing the donor to make a Lasting Power of Attorney, and that the donor understands what he/she is doing. Then the power has to be registered at the Office of the Public Guardian.
A rogues’ charter?
Despite all that, there are concerns about the abuse of such powers of attorney. Of course, the welfare of the elderly has to be regulated, but is the rest of the population to be left at the mercy of rogues and forgers? Section 10 is an empowering provision, beyond the wildest imaginings of those who spend their time trying to cheat the gullible. Indeed, gullibility is not required, since a little online research, leveraged by hacking, will expose much of the assets of most of us, alert and intelligent as we believe ourselves to be, to the ambitiously corrupt.
Whilst the death, bankruptcy or mental incapacity of the donor will automatically revoke the power, and the donor himself may revoke it at any time, firstly he needs to know that the power exists, forgery though it may truly be.
What could be changed?
A little online research reveals that, in the USA and Canada, a notary public is required to witness the signature of the donor of such a power – and certainly in order to validate it, where real property is involved. In Europe, nothing material can legally be done without the involvement of a notary, so a s.10 power would appear laughable to those who enjoy the protection of the Code Napoléon.
In my view, this is one area where the English system is patently lagging. The Law Commission should urgently consider the whole question of general powers of attorney, and seriously consider legislation to ensure that they can be validated only by the signature of a solicitor or a professional person of similar standing, whose existence and qualifications can be verified, so that the innocent are protected from possibly the most ingenuously dangerous piece of legislation to be found on the Statute Book of England and Wales. Section 10 really is a thieves’ charter just waiting to be exploited.
Howard Epstein is in his 53rd year as a solicitor, and is the author of fiction, non-fiction, a biography and an historical novel: https://howard-epstein.com