CONTENTS
1. Introduction
When managing the property and affairs of someone who lacks capacity, it will sometimes be necessary to consider whether to sell a house or other major asset. Any decision making must be made by following the Hull City Council guidance on best interest decision making. Particular attention must be paid to the following issues.
- Does the asset hold sentimental value to the person or a close family member?
- Is the asset named as a bequest in the person’s will?
- Is storing the item likely to lead to a loss in value, or is the cost of storage likely to exceed the item’s worth?
- Would the person gain greater benefit from having the money to be gained from selling the item?
If, having considered the points above, the person would gain greater benefit from the money rather than from the asset, the sale should go ahead. If the reverse is true, appropriate storage should be arranged. Any payment should be made from the person’s assets.
2. Authority to Sell the Person’s Property
2.1 Consent of the Court
The consent of the Court of Protection is not usually required if:
- the Order or Direction appointing the Deputy authorises the Deputy to make decisions about ‘property and affairs’; and
- the sale is in the best interests of the person who lacks capacity.
If there is any doubt as to whether the sale serves the best interests of the person who lacks capacity, an application should be made to the Court in form COP1.
The Court does not need to approve the sale price. However, the Deputy must be able to show they are acting in the best interests of the person when agreeing the sale price. In order to demonstrate due diligence, best practice should be followed as outlined below.
2.2 Advertising the property for sale
The sale should not be advertised as being made by Order of the Court of Protection. No reference should be made to the seller’s capacity (or lack of capacity). The address of the seller (if required) should be care of the address of the Deputy. This reduces the risk of inadvertent discrimination.
2.3 Valuation
The property should be valued by a valuer who has confirmed they have no personal or professional interest in the sale and who has:
- the professional qualifications FRICS, MRICS, FSVA, ASVA; or
- at least five years’ experience with a firm or firms practicing in the locality of the property.
The valuer should be asked to advise on and provide written confirmation of the lowest price to be accepted for the property. Three independent valuations are recommended. The cost of any valuation should be negotiated and may be included in the marketing package of the chosen estate agent. In addition, an affidavit of value is recommended where:
- the sale is of a business property; or
- the person buying the property is known to or associated with the Deputy or is a member of the family of the person who lacks capacity; or
- the Deputy considers the circumstances to be exceptional or for any reason they feel it may be diligent to do so e.g. if there is a history of family conflict.
2.4 Agent’s charges
The Court does not need to approve the charges of estate agents. A minimum of three quotes should be obtained and used to negotiate a competitive rate of commission.
3. Instructing a Conveyancing Solicitor
The conveyancing solicitor must have particular knowledge and where possible, experience of conducting sales via a person’s deputy. Fixed tariffs are set by the Court of Protection for this type of work at 0.15% of the sale price with a minimum sum of £400 and a maximum sum of £1,670 plus disbursements.
4. Dealing with the Proceeds of Sale
There is no longer a strict obligation to lodge the proceeds of sale into Court. However, the Deputy must act in the best interests of the person who lacks capacity in placing or investing the proceeds. Upon receipt of the funds, the deputy should ensure the following:
- repayment of any charges on the property (including a local authority charge);
- payment of the estate agent’s fees;
- payment of the disbursements reasonably and properly incurred by the acting solicitor (e.g. Land Registry documents, bank transfer fees);
- payment of fixed costs for the conveyancing.
The Deputy should obtain specialist Capital Gains Tax advice and independent financial advice to ensure the person gains the maximum benefit from their capital.
5. Death of the Person who Lacks Capacity during the Sale of Property
The Court’s jurisdiction ceases on the death of the person who lacks capacity, as does the authority of a Deputy.
The completion of any sale or purchase must then be agreed by the executor of the person’s will, or the Bona Vacantia department, if the person dies intestate with no next of kin.
