Matthew Cameron explains what happens in French law if a property owner is deemed too young, or no longer able, to look after it properly
What if a homeowner is not deemed capable of looking after a property?
Occasionally we seem to go through periods at our law firm where lots of similar enquiries come in from potential clients. Recently, we have received several calls from people concerned with how they may administer assets in France of a family member who does not have capacity to do it themselves.
There are two main forms of incapacity that interest us: the first being in relation to minors (those aged under 18), and the second being adults who have lost mental capacity. We shall look at each in turn. Of course, the information below is general; detailed advice should be sought on each case.
Minor issue In the UK, minors are not able to own property in their own name. Should a minor inherit a property in the UK, then it will be held on trust until he or she becomes an adult. British nationals will be comfortable with this concept. However, in France trusts are not recognised as property ownership vehicles in the same way.
When it comes to France, a minor is entitled to own a property, either in part or absolutely in his or her own name. This right applies to British nationals (for example, children who have inherited a holiday home) whether they are resident in France or the UK. There is no need to have third party involvement for oversight of the ownership structure. Nevertheless, legal complexities arise should there be a need to sell before any minor children become adults, especially where the child is a British national.
While children are entitled to own property in France, they cannot sell it, or take any steps to pass title to any other person. That power to transfer title from the minor child rests with the court. If the children are British nationals, it will be for the UK court to grant authority for a sale.
While the UK court does not have jurisdictional authority to make any orders in relation to transfer of land in France, it does have authority to administer the affairs of British national children. Thus even though the property is in France, it is right that a British judge would be competent to confirm whether a British child’s share of a property should be sold.
There is in fact a set of international regulations to which the UK has subscribed that cover administration of the international rights of minors, and such matters are covered by this.
Conflicts of interest The court’s overriding obligation is to ensure that the best interests of the child are reflected in any order that it may hand down in a judgement. In order for that to happen, the court must be satisfied that it is indeed in the best interests of the child for his or her interest in the property to be sold. In order to be certain of that, the court will want to take evidence from the child, or at least from a person authorised to stand as a representative.
A ‘litigation friend’ – generally another family member such as a grandparent – has to confirm that the child would be in agreement with the transaction.
While it may appear somewhat burdensome for the court to require that another person declare the transaction should proceed, it is done to protect the interests of the child. Let’s take as an example the relatively common case where a person has died leaving an interest in the French home to a minor, who then is the legal owner jointly with the surviving parent. If that parent then wants to sell the property, perhaps to reinvest elsewhere, that will require approval by the court on behalf of the child.
We can expect that the court would be happy to approve the sale if the parent wanted to return to the UK, perhaps investing some of the proceeds of sale into another house. However, the parent may have other plans for the money: the court might insist that the proportion due to the child would have to be invested on the child’s behalf, so that this fund would be protected. The interests of the child might not, on occasion, match up exactly with those of the parent.
The result of this, then, is that where a sale is to be sought by the surviving parent, an application is made to the UK court, with parent and child having to seek separate legal advice before applying to the court – the child’s advice being sought via his or her ‘litigation friend’. The theoretical risk of a conflict of interests arising as between parent and child obliges separate representation for each party.
Adult incapacity It is an unfortunate side effect of the fact that we are tending to enjoy longer lives that more of us are suffering from problems with mental capacity as we age. The risk exists, therefore, that our ownership of a property in France might become affected by questions of capacity.
Just as with minors, there is a set of international rules that governs how the interests of an ‘incapable adult’ can be administered. These rules, though, do not always help.
Where a British national has completed a Lasting Power of Attorney (LPA), it is possible for this to allow the transfer of that person’s real property in France. For clarification, an LPA is a document that can be completed in the UK under which a person authorises trusted family
The interests of the child might not, on occasion, match up exactly with those of the parent
members, or named professionals, to manage their affairs in the future, should he or she lose mental capacity.
However, it is not simply a case of presenting the LPA to the notaire. It will require formal translation into French – and being a large document, this can be expensive. In addition, the translation will inevitably have to be legalised for use in France; this legalisation has to be carried out by a specialist solicitor or a notary public. On top of that, the solicitor is likely to have to prepare a declaration (in French) asserting the validity under UK law of the LPA, and its effectiveness in France.
Powerless attorney? These steps will inevitably demand some further involvement in the sale by the solicitor in the UK. The French notaire would understandably not be expected to understand the validity of the English document, so will need to rely on the British solicitor for suitable reassurance. That will evidently have an impact on the costs of the sale. However, compared to the position that would arise if the person had not completed an LPA, the extra costs pale into insignificance.
If someone loses capacity without having completed an LPA, then an application must be made separately to the Court of Protection to establish a ‘ tutelle’ or ‘deputyship’, under which a named person is empowered to take decisions and sign documents on his or her behalf. The procedure can be rather slow, and costly, in particular where a specific request for authority to sell a foreign property is included.
While there are relatively few cases where a sale is sought on behalf of a person without capacity, numbers do appear to be rising. Unfortunately, the costs of such processes can be disproportionate, and the court procedures time-consuming – such that keeping a potential buyer interested while an application is made can itself be challenging.
It is always prudent, therefore, to consider the risk of loss of capacity, and its consequences, at an early stage. You may want to consider writing wills and, if your children are minors, think about whether they should necessarily inherit from you (there are lots of points to consider here). You may also want to think about completing an LPA. The advice of a specialist solicitor should be of great value.