When conveyancing and the Court of Protection collide

Property transactions involving vulnerable individuals require a level of legal expertise, sensitivity and procedural rigor that goes beyond the call of routine conveyancing. Clients who have attorneys, or court-appointed deputies, require an even more nuanced set of skills.

Role of the deputy

Deputies appointed to act on behalf of protected parties (P) are under a legal duty to ensure that any advice they obtain is not only legally sound but also represents value for the ultimate beneficiary.

In recent years, the commoditisation of conveyancing services has led to a proliferation of linear formulaic conveyancing. While this model can offer competitive pricing and the potential for rapid turnaround times, it may lack the subtlety required to navigate the complexities of capacity law, trust structures and Court of Protection obligations.

This can result in delays and legal complications, as agents and other parties may struggle to comprehend the extent of the deputy’s duties.

When a deputy is tasked with buying or selling property on behalf of P, the transaction is not merely a matter of transferring title. It involves understanding many elements, including:

• pressures and responsibilities deputies face
• managing expectations of families and protected individuals
• ensuring compliance with legal frameworks, including Practice Note 19B and the ruling in Re ACC [2020] EWCOP 9
• maintaining transparent cost structures
• avoiding hidden fees
• proper documentation and authority from the Court
• accurate valuation to ensure fair transactions, and
• interconnection with other related transactions, such as ongoing litigation or deprivation of liberty considerations.

Managing finances

Under Practice Note 19B, deputies are permitted to use P’s funds to pay for conveyancing costs, provided the service is one P would reasonably be expected to pay for if they had capacity. Unfortunately, this worthy intention does not allow for the heightened considerations that the needs of a vulnerable person may bring to the transaction.

A deputyship order in the standard terms may allow general management of finances, but it does not automatically permit the transacting of property.

You must either have a deputyship order that explicitly authorises property transactions or apply for a specific order from the Court of Protection to approve the proposed transaction.

Obtaining quotes

If the deputy wishes to instruct their own firm, they must obtain three quotes, including one from their own practice, and justify their choice in the Office of the Public Guardian (OPG) report. If the chosen quote from the deputy’s own firm exceeds £2,000 plus VAT, specific court authority must be sought before proceeding. This ensures transparency and protects P’s financial interests but may introduce an element of delay.

Property practitioners may feel that the fee levels quoted make it difficult to provide tailored advice at these fee levels. For example, is an estimate obtained online likely to have taken the peculiarities of such a transaction into account and might it ultimately cost P more once the complexities come to light?

Deputies therefore must be vigilant when comparing quotes. The cheapest quote may not always be the most appropriate, especially if it contains hidden disbursements or lacks the specialist knowledge required. A conveyancer unfamiliar with Court of Protection matters may inadvertently cause delays or legal issues that ultimately cost more.

Best interests

Making decisions in P’s best interests requires not only legal knowledge but also emotional intelligence. Conveyancers must be able to communicate clearly with families, manage expectations and ensure that all parties understand the process. This is particularly important when the deputy is a cash buyer, as timelines can be tight and pressure high. The property may have had, or require, adaptation. Detailed surveys with checks of those matters commonly excluded from regular survey scope are likely to be needed.

Record keeping

Proper record-keeping is essential. Deputies and their conveyancers must be prepared to answer questions from various stakeholders, including the court itself, estate agents, solicitors and family members. Whether buying or selling, the deputy must demonstrate that the transaction is fair and in P’s best interests, which may include wider family considerations. Collaborating with surveyors experienced in Court of Protection transactions can help secure this outcome.

The Rayner case – lessons learnt

When trusts and vulnerable people are involved, complexity increases. This was seen in the recent case involving the then deputy prime minister. In 2020, a trust was created by court order to support Ms Rayner’s disabled child. Over time, Ms Rayner transferred her interest in a property to the trust and later sold the remaining interest for £162,500. She then purchased a home in Hove for £800,000 and paid standard rate Stamp Duty Land Tax (SDLT) However, her advisers noted that they were not tax specialists and recommended she seek expert tax advice. Ms Rayner did not do so. Later, following media scrutiny, she obtained specialist advice which revealed she should have paid the higher rate of SDLT, resulting in significant underpayment.

Under Schedule 4ZA of the Finance Act 2003, the higher rate of SDLT applies if the buyer owns another property worth over £40,000 and is not replacing their main residence. Paragraph 12 of the legislation deems parents to own property held in trust for minor children. There is an exclusion under paragraph 12(1A) for trusts created under the Mental Capacity Act 2005, but it appears Ms Rayner’s trust did not qualify – possibly it was not a court created trust but arising from an amalgam of family issues. It is not clear if she remained a trustee of the settlement. It is easy enough to imagine another parent in a similar situation feeling they could allocate funds better, at a time when budgets are tight, than on specialist tax advice.

HMRC imposes penalties for careless errors under Schedule 24 of the Finance Act 2007. A taxpayer is considered careless if they fail to take reasonable care, which includes acting on advice that contains substantial caveats. In Ms Rayner’s case, her advisers explicitly recommended seeking specialist tax input. Her failure to do so is likely to constitute carelessness, and she may face a penalty. There are wider questions as to the complexity of the taxation regime that pertains for another time.

The Rayner case underscores the importance of acting on caveated advice and seeking specialist input when necessary, understanding deeming provisions in tax law, especially when trusts are involved, ensuring trust structures qualify for relevant exclusions, such as those under the Mental Capacity Act, and documenting decisions and advice received, particularly when acting in a fiduciary capacity.

Final thoughts

The case serves as a powerful reminder of the risks involved when advice is not followed or when advisers lack the necessary specialism. By choosing a conveyancer with proven Court of Protection experience, deputies and trustees may ensure they meet their obligations, protect P’s interests and avoid costly legal and financial pitfalls.