How to deal with conveyancing when a client loses capacity

When dealing with conveyancing for
a client who lacks capacity or is not available
to sign necessary documents,
you will liaise with someone who has power of attorney.
It is important to note the different types and their general powers in relation
to property transactions.

An ordinary power of attorney applies when someone is appointed in the event of a physical illness or the client is abroad for an extended period. This power should not be used if the client has a mental capacity issue or illness that leads to mental incapacity.

Such powers do have a standard form of wording but can be as broad or as limited as the client requires. You may be asked to draw up such a power to allow a specific person to deal with a property transaction.
In these circumstances, it is recommended that you carefully draft the power only
to deal with that particular transaction so as not to give other powers inadvertently.

Generally, I try to stay away from this type of power. These days most people are online, and as such, it is possible to email documents for clients
to print, sign and post back.
I believe this is a safer option:
the client cannot complain
later about a decision that
was made on their behalf.

A lasting power of attorney tends to be used only when the client has lost mental capacity perhaps through injury, dementia, alcohol or drug misuse, or medical treatment. It is important to remember that LPAs can only be used once they have been registered with the Office of the Public Guardian.

Recently, I had a case where I was taking instruction on the sale of a property from the two sons of an elderly client. I asked them for their power of attorney and was provided with the standard form LPA.

However, I noted that it
had not been registered. At
first, it was difficult to get further information from the attorney
as to whether the LPA had
been registered.

You can conduct a search
by submitting form OPG100 (available from www.gov.uk)
via email to the OPG, which will tell you if an LPA has been registered. As the attorneys in my case were unable to confirm registration, this search gave me the information I needed.

Valid questions

It is good practice to inform the other party to the transaction as soon as possible that there is a power of attorney, regardless of which type is used. They will also want to see a copy of the power so that questions about validity can be satisfied.

As a purchasing conveyancer, you will be concerned that the power has been drawn up correctly (i.e. has the necessary power to deal with the property subject to this transaction) and has been properly executed. For an LPA, you will want to see that the power has been registered. The same concerns arise for the selling conveyancer.

In my case, the buyer’s conveyancer and I agreed that we would proceed with the transaction but not exchange or complete until the LPA had been registered, which took about six weeks. As soon as I was able to show that the parties who were purporting
to sell the property had the necessary powers to do so, the transaction concluded swiftly.

The alternative for the
buyer’s solicitor would be to stop all work until the LPA was registered and evidence of the same produced. There is no reason why that is not the correct approach.

However, it was evident
from the details we had on file that the matter was genuine so there was a small risk of the transaction not proceeding.

Ultimately, there was a slight delay while registration of the LPA took place, but all parties were fully informed of the reasons for the delay and
the risks.

John Coulter is a solicitor at Hadaway & Hadaway 

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