In England and Wales, a trust of land is imposed when property is jointly owned by two or more parties, which separates the legal ownership from the beneficial ownership. This means that all legal owners of jointly held land, being the people recorded as owners of the property on Land Registry or in the title deeds, are known as trustees.
In practice, it is common for people to purchase property together, and hold it on trust for the benefit of themselves. However, in the situation where one or more of the joint owners (trustees) no longer has the capacity to deal with the jointly owned property, difficulties can arise at the point of sale.
In these cases, an application can be made to the Court of Protection in order to replace the trustee who lacks mental capacity. There are two primary types of applications to replace a trustee in respect of the property sale, which depend on whether there is another surviving trustee who has mental capacity, or whether the individual who lacks capacity is the only surviving trustee. There are exceptions to this rule, where an application to The Court of Protection is not required, so it is important to seek specialist advice regarding any property sale involving a trustee who lacks capacity.
In the circumstances where there is another trustee with the mental capacity to facilitate the sale, an application can be made for permission to appoint a new trustee to act alongside the continuing trustee. On the other hand, if the trustee who lacks capacity is the sole surviving trustee, an application can be made to the Court of Protection to appoint at least two trustees in their place.
Both categories of applications require similar evidence, including details as to the person who lacks capacity and the proposed trustee(s), as well as a special undertaking by the trustees. The application must also include a witness statement with the details of any former and current trustees, the names and addresses of any person with an interest in the trust property, and details of the property being sold. Key documents such as trust deeds, title deeds, wills, death certificates and grants of probate must also be exhibited where relevant. Supporting statements must also be provided, commenting on the fitness of the proposed trustees.
The Court must be satisfied that appointing the trustee is in the best interests of the person who lacks capacity. Therefore, in addition to considering the application for an additional/ replacement trustee, it is worth considering whether the Court will require the individual’s Deprivation of Liberty Safeguards (DoLS) report, and any supporting documentation which shows that the person who lacks capacity can no longer live within their property.
If the Court grants the application to appoint replacement trustees, who proceed to sell the jointly owned property, the trustees should ensure that they safeguard and manage any proceeds of sale appropriately.
If you need assistance with selling a jointly owned property where one or more parties lacks capacity, please do contact a member of our specialist Court of Protection Team.