Ferbrache & Farrell successfully applies for permission to sell under the new Capacity Law

In April 2022, the Capacity (Bailiwick of Guernsey) Law, 2020 (the “Law”) came into force, enabling a person (“Donor”)  to appoint an Attorney (or Attorneys) to manage their affairs when they no longer have mental capacity. The Law requires an Attorney to make an application to Court for certain significant decisions, such as permission to sell the Donor’s property.

Ferbrache & Farrell has successfully made the first two applications for permission to sell on behalf of Attorneys appointed by a Lasting Power of Attorney (“LPA”) made under the Law. Additionally, we provided comprehensive support throughout the simultaneous property sales, ensuring the seamless execution of these transactions.

The Lasting Power of Attorney – Property and Financials Affairs – disposing of Donor’s real property

If the Donor gave permission within their LPA for the Attorney to deal with their real property, the Attorney must follow the correct process when they deal with a disposal of real property. If the Donor included a restriction in relation to real property within the LPA, the Attorney will be unable to deal with the sale on behalf of the Donor.

The Donor can specify whether the LPA can be used while they still have capacity, or only once the Donor has lost capacity.

If the Donor still has capacity and the LPA permits, the LPA can be used as standard Power of Attorney for the sale of the property.

If the Donor has lost capacity the LPA will need to be activated before it can be used to deal with Donor’s financial affairs.

The Law imposes limitations on an Attorney’s power to dispose of the Donor’s real property once they have lost capacity, and property can only be disposed of by complying with the requirements under the Law.   Failing to comply with these requirements is an offence.

Permission to sell

In order to sell real property under an LPA, the Attorney must firstly identify a suitable buyer for the property. This may involve engaging the services of an estate agent to market the property effectively and attract potential buyers.

Once a buyer is secured, the Attorney will need make an application to the Court for permission to dispose of the property before the sale can take place (“Application”). An Advocate can play a crucial role in guiding the Attorney through the legal intricacies of the Application and the conveyancing process.

Before making the Application the Attorney must give 28 days’ notice of the intention to dispose of the Donor’s property to

(a) all other Attorneys; and

(b) any person of whom the Attorney is aware, after reasonable investigation, has an interest (whether vested or contingent) in that real property.

The Attorney will also need to obtain an independent valuation of the property to demonstrate that the property is being sold at an appropriate price.

Once all formalities have been complied with, the Court will consider whether granting the Application to sell the property is in the best interests of the Donor and if permission is granted, the property can be sold by the Attorney.

In order to safeguard the best interests of the Donors, when Attorneys are seeking to dispose of their real property, the Law requires a systematic approach and adherence to legal requirements. Ferbrache & Farrell can assist with both the conveyancing process and any court application required.

If you need assistance with the process please contact Jana Valkovska or your usual contact at Ferbrache & Farrell.