Assistant Land Registrar Richard Heaney looks at the land registration aspects of transactions involving the use of a power of attorney
There are numerous circumstances in which a person (the donor) may decide to draw up a power of attorney so as to enable another person (the attorney) to sign documents and to act on their behalf.
This article is not intended to give a full overview of the various forms of power available, or the relevant statutory provisions governing their use. Instead it addresses some of the more common issues encountered by Land Registry when an attorney is acting in a conveyancing transaction.
Lodging an application
Although Land Registry will not enquire as to why a power has been granted, when registering a document signed by an attorney we need to be sure that the power binds the individual or company on whose behalf it was signed, and that it authorises the attorney to take the action in question.
When lodging an application with Land Registry that involves a power of attorney, we will require either the original or a certified copy of any power of attorney that you are relying on to establish that a document lodged with your application has been validly executed. Alternatively, we will accept a conveyancer’s certificate in form 1 to schedule 3 to the Land Registration Rules 2003 (LRR 2003). Please bear in mind that when lodging an application relating to registered land, we only need certified copies of the deeds or documents. Once we have made a scanned copy of these they will be destroyed, regardless of whether you lodge the original or a certified copy. When lodging an application for first registration of land we will still need the original documents of title, but you only need lodge a certified copy of any supporting power of attorney.
Dispositions in favour of the attorney or at an undervalue
Attorneys are under an obligation to act in the best interests of the donor. Subject to any conditions or restrictions in the instrument creating a power of attorney, an attorney acting under either an enduring power of attorney (EPA) or a lasting power of attorney (LPA) can only act so as to benefit either themselves or persons other than the donor in very limited circumstances. Paragraph 3(2) – (3) of schedule 4 to, and section 12(2) of, the Mental Capacity Act 2005 (MCA 2005) limit the authority of attorneys acting under either an EPA or LPA, respectively, to act so as to benefit either themselves or persons other than the donor.
It is difficult to imagine a situation where a gift of land would fall within the scope of these provisions, although there may, of course, be exceptional circumstances to the contrary.
Consequently, we would usually reject any application to register a disposition of land that involves a gift, a transaction at an obvious undervalue or one that confers a benefit on someone other than the donor, where such a disposition is supported by either an EPA or LPA, unless either:
the donor executes the transfer or other documents in person after a requisition, assuming they have mental capacity, or
if the donor lacks mental capacity, the transfer or disposition is authorised by the Court of Protection under paragraph 16 of schedule 4 to, or section 23(4) of, the MCA 2005.
Dispositions involving joint proprietors
Additional considerations arise where the property in question is jointly-owned. In such cases, the property is held on a trust of land with the legal estate being held on trust for those who are beneficially entitled to the property. As a consequence, it will be necessary to consider the issue of ‘overreaching’, and whether the attorney can give a valid receipt for capital monies arising on the disposition. In addition, in circumstances where the attorney is not acting under a power given under section 25 of the Trustee Act 1925, you will need to ascertain whether the donor had a beneficial interest in the property at the time of the disposition, and whether the attorney can therefore exercise trustee functions.
For all dispositions of property held on a trust of land dated after 29 February 2000, a receipt for capital money will overreach the beneficial interests only if the attorney acts with at least one other person (section 7 of the Trustee Delegation Act 1999 (TDA 1999)). This means that a receipt clause in a disposition by joint proprietors is not acceptable if it is signed by one person acting in both their capacity as registered proprietor of the property and as attorney for the other joint registered proprietor(s), or by one person acting as attorney for all the registered proprietors of the property.
In such circumstances we would return the document so that it can be executed by the donor of the power or, where the donor lacks capacity, by an additional trustee appointed either by the other joint proprietor, or by the attorney under section 8 of the TDA 1999 (and section 36(6A) of the Trustee Act 1925).
If, for any reason, it is not possible to have the document re-executed, we may enter a restriction in the register in form A to schedule 4 to the LRR 2003, or leave the existing form A restriction – or its earlier equivalent – in the register, so as to protect any beneficial interests that were not overreached and may still subsist.
Beneficial interests in land
All joint owners of land hold the legal estate as trustees. As a consequence, any disposition of land by the attorney of such an owner will involve the exercise of the trustee functions of the donor. Section 1(1) of the TDA 1999 regulates the exercise of trustee functions by an attorney. In accordance with this provision, a donee may only exercise trustee functions of the donor if, at the time when the act is done, the donor has a beneficial interest in the land. As a consequence, it is necessary to provide evidence of the donor’s beneficial interest in accordance with section 2 of the TDA 1999.
Therefore, where a disposition is executed under a general power of attorney or an EPA or LPA, the registrar must be satisfied that the donor had a beneficial interest in the property at the date of the disposition.
A written statement by the attorney given within three months of the date of the disposition confirming that the donor had a beneficial interest in the property is, in favour of a purchaser, conclusive evidence that the power could be used (section 2(2) of the TDA 1999).
The attorney may therefore find it convenient to include a statement in the disposition in the additional provisions panel of a TR1 or other prescribed form, or in the body of a lease or charge, along the following lines:
‘(Attorney) confirms that (donor) has a beneficial interest in the property at the date of this (transfer, charge etc.)’.
Alternatively, the attorney may adapt an attestation clause such as:
‘Signed as a deed by (donor), who has a beneficial interest in the property at the date of this (transfer, charge etc.), acting by (his/her) attorney (attorney) in the presence of’;
or use expanded words of signature such as:
‘John Smith by his attorney Jane Brown who confirms that the donor has a beneficial interest in the Property at the date hereof.’
The attorney could also provide a separate signed written statement confirming that the donor did have a beneficial interest at the date of the disposition, as long as that statement is dated within three months of the date of the disposition. Finally, they could provide a certificate signed by a conveyancer confirming from their own knowledge of the facts that the donor had a beneficial interest at the date of the disposition, again dated within three months of the date of the disposition.
If, for any reason, the attorney or their conveyancer cannot provide such a statement, we may consider other evidence to demonstrate that the donor had a beneficial interest at the relevant time. We may be able to accept a statutory declaration or statement of truth by a responsible person with full knowledge of the facts. However, if the applicant cannot produce acceptable evidence of the donor’s beneficial entitlement, the donor of the power will need to execute the document personally.
Execution of deeds by attorneys
When lodging a deed that has been executed by an attorney – a transfer, for example – the attestation clause should make it clear that the individual or company executing the deed has done so in their capacity as attorney. An attorney who is an individual may execute the deed (whether the donor is an individual or a corporation) either by signing in their own name or in the name of the donor (section 7 of the Powers of Attorney Act 1971; section 74(3) of the Law of Property Act 1925). Although there is no prescribed attestation clause, the following form of wording would be acceptable: ‘Signed as a deed by (full name of attorney) as attorney for (full name of individual or corporation) in the presence of:’. If necessary, this form of wording could be expanded as set out above to account for the donor’s beneficial interest. For further details, see Practice Guide 8 – Execution of deeds.
Land Registry often receives applications where one of the parties to a transaction – a transferor, for example – is acting by their attorney. In such circumstances, we require confirmation of identity for both the transferor (the donor) and their attorney. This is because it is the transferor, as registered proprietor and seller of the property, who is the party to the transaction, rather than their attorney, who is only empowered to execute the transfer on their behalf. Further details can be found in Practice Guide 67 – Evidence of identity.
It is often the case that the conveyancer will complete panel 13 of form AP1, or panel 15 of form FR1 evidencing confirmation of identity, in the following way:
‘John Smith as Attorney for Robert Jones’, or
‘Robert Jones acting by his Attorney John Smith’.
If we receive an AP1 or FR1 form completed in this manner, we cannot assume that the conveyancer has checked the identity of the donor of the power, or that they actually act for them. We will therefore request confirmation that the conveyancer is acting for the donor, and that they have checked their identity. If the donor is unrepresented, we will require evidence as to their identification in form ID1 or ID2.
The only exception to this requirement is where it is clear from the application that the conveyancer acts for both the donor and the attorney, and that they have checked the identification for both, or it is clear from panel 13/15 of form AP1/FR1 that the conveyancer acts for all parties; for example, the relevant panel will have been completed as follows: ‘Robert Jones and his Attorney John Smith’.
To find out more see Practice Guide 9 – Powers of attorney and registered land.
This article was first published in the September 2015 edition of Property in Practice, the magazine of the Law Society’s Property Section (www.lawsociety.org.uk/property).