Gifts Of Property Executed by Attorneys: What Does HMLR Want?

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Conveyancers need to note that HMLR has introduced amendments following last year’s ruling in Chandler v Lombardi¹.

The lasting power of attorney (or enduring power) will, of course, need to be submitted with the transfer, along with further necessary evidence. Sections 2.4 and 2.7 of HMLR practice guide 9 has been updated to reflect the Chandler decision.

In that case, the court clarified that a transfer by an attorney on behalf of the donor under a lasting power which breaches the requirements of section 12(2) of the Mental Capacity Act (MCA) will be void. Under s12(2), an attorney’s power to make decisions to transfer or gift the donor’s property are restricted, for instance a transfer must not be made if not in the best interests of the incapacitated person.

Proposed gifts that are not permitted within s12(1) must first be authorised by the CoP.

Chandler

A brief reminder of what Chandler was about. The donor’s daughter was the registered attorney for her mother in respect of both her health and welfare, and property and financial affairs. In June 2018, the daughter purported to transfer her mother’s property (held in her sole name) into their joint names as tenants in common in equal shares. At the time, her mother had advanced dementia and died the following January.

The court ruled that the transfer amounted to part gift of the property to the daughter as attorney, yet CoP authorisation had not been sought beforehand. Her claim that she did not know authorisation was necessary was treated with disdain: she had not acted with care; the ‘gift’ was made without consideration and she knew it was a “controversial and contentions step” to take.

Importantly, the court ruled that as a matter of statutory construction, the transfer was void and not merely voidable. An order for rectification of the register was made under Schedule 4 of the Land Registration Act 2002.

The PG makes clear that evidence of authorisation by the CoP will be required before a transfer by way of gift will be registered. It states that HMLR “will usually refuse to register a disposition involving an element of a gift or benefit (including a transaction at an apparent undervalue, or a loan) that is executed under an enduring power unless the court has authorised the disposition under Schedule 4, paragraph 16(2)(e) of the Mental Capacity Act 2005”.

Any such gift made without authorisation will be void.

On a related note, two further practice points from HMLR to note:

• Conveyancers involved in transfers executed under a foreign power of attorney should note additional guidance under a completely new section 8 in practice guide 9
• A new section (3.1.5.8) G19 (notices and restrictions) now includes guidance on how HMLR deals with a deed signed by someone who is not the registered proprietor when there is a restriction in Form LL in the register. This includes an attorney or a court appointed deputy.

Importantly, the conveyancer providing a certificate to comply with the restriction must satisfy themselves that the attorney or deputy is the registered proprietor’s attorney/deputy; and that the individual executing the transfer is the same person.

¹Chandler v Lombardi [2022] EWHC 22