I was hoping members can advise me on the following debate I’ve been having with my conveyancing colleagues. Settlor created a property trust with her two children as joint trustees. Settlor has a lifetime interest in the property with right to receive rent. She also has in place a Lasting Power of Attorney for Property and finance with her two children as joint and several attorneys. Settlor has lost capacity. Can the attorneys sell her property under the LPA? They seem to suggest there’s a conflict of interest. Can anyone assist?
A life tenant cannot sell the trust property. She doesn’t own it. It is up to the trustees who have the power of sale. She can’t sell 10 Downing Street either, one imagines, for the same reason!
Jack Harper
I think you meant her own personal property. Surely a significant reason for making an LPA is to facilitate such a sale by trusted persons appointed attorneys. Presumably they were appointed trustees because so trusted. Their duty as trustees to the beneficiaries and as attorneys to the donor are not so different; in each case their actions are circumscribed by trust law on the one hand and the legal limitations on attorneys. Hard to say more without knowing the details of any proposed sale e.g. the identity of the purchaser and the terms, especially the price. It will need to pass a COP judge’s sniff test.
Jack Harper
From a conveyancing viewpoint, on the basis that the settlor (S) and their 2 children (C1 and C2) are the trustees of a trust of land in which S has a beneficial interest, and C1 and C2 are attorneys for S under a property and affairs LPA then, yes, C1 and C2 can sell the property. They have the power under s.1 Trustee Delegation Act 1999 to exercise S’s trustee functions and, as there are the 2 of them also acting as trustees, the “two-trustee” rule is complied with.
Whilst C1 and C2 have the power to sell the property, as Jack points out, there are wider issues that need to be considered before such power is exercised.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Thank you both for your replies. It’s an at arms length sale on the open market through an estate agent. The mother(settlor) is now in a care home and the children are planning to sell and transfer proceeds to support her care costs. So surely this is the reason for having a LPA to allow the attorneys to act on behalf of the mother? So from your replies, yes the children can sell using the LPA.
The original question stated that the 2 children are the trustees. If S is not also a trustee they do not act as her attorneys but in their own (though of course I agree with Paul if she is a trustee). They can sell in their own right as trustees, as long as they alone are named as the proprietors at HMLR. Hopefully they are with a Form A restriction but sometimes one finds that after settlement the title has not been updated.
But if she is a trustee the trust deed must allow the two surviving trustees to act or, if it does not, a substitute would have to be appointed and I would have thought that s.36(9) TA 1925 would require COP consent: as a contrary statutory enactment it is not overridden by s.36(6)
s1(1) TDA 1999 (which applies only to land, its sale proceeds and any income from it) requires reference to the trust document:
" S.1(3) Subsection (1) above—
(a) applies only if and so far as a contrary intention is not expressed in the instrument creating the power of attorney, and
(b) has effect subject to the terms of that instrument."
It would be prudent to read the whole of s.36 TA especially subsections (6)(A) to (6D); and the TDA in full as much of it is highly relevant.
It might be desirable to obtain a formal professional valuation. This rather depends on how concerned the sellers are that they might come under fire in future. Lay clients can tend to be over-sanguine about this eventuality. Covering the point at least might protect he adviser(s).
Jack Harper
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| Dougramm DougR
21 January |
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Thank you both for your replies. It’s an at arms length sale on the open market through an estate agent. The mother(settlor) is now in a care home and the children are planning to sell and transfer proceeds to support her care costs. So surely this is the reason for having a LPA to allow the attorneys to act on behalf of the mother? So from your replies, yes the children can sell using the LPA.
Thank you all for your replies. Much appreciated.