Some clients worry about granting a Power of Attorney.  Sometimes a client will say “I wouldn’t trust X to look after my affairs properly.“  It is easy to deal with that – in such a case under no circumstances should X be appointed as an attorney.  There is no entitlement to be appointed someone’s attorney just because of a blood relationship.  So if clients have unreliable relatives they just should not appoint the relatives as attorneys.  The whole idea of appointing an attorney is to give powers to someone to act for your benefit and your benefit alone – consequently if a client has any doubts as to the integrity of the person to be appointed – the appointment should not be made.

Assuming a satisfactory person is found, clients can be reassured that person cannot simply do what he or she likes with the affairs of the incapacitated person. Attorneys are bound by a strict code of law laid down in the Adults with Incapacity Scotland Act.  Of course they should only act, at all, if the person who made them their attorney is for some reason (usually but not always illness) not capable of dealing with things himself or herself.  And when an attorney does act he or she must adhere to five principles laid down in the Act.  Simply put these are:  1. There must be no intervention unless for the benefit of the adult – “adult” being the name used for the incapacitated person in the Act.  2. Any intervention must be the least restrictive option in relation to the freedom of the adult.  3. Account must be taken of the present and past wishes of the adult.  4. Account must be taken of the views of others, eg the nearest relative or primary carer.  5. The attorney must encourage the adult to exercise whatever skills he or she has with respect to property etc.

In common sense terms being bound by these principles the attorney I suppose has to exercise his powers effectively acting in the way the adult would have acted had the adult not lost capacity.

Should an attorney breach the principles in the Act or act improperly then the Act does allow for robust sanctions.  The Public Guardian, the Mental Welfare Commission and Local Authorities and indeed any person claiming an interest in the affairs of that adult can apply to the court to safeguard the property, financial affairs or personal welfare of the adult.  The sheriff then has significant powers to resolve matters including placing that attorney under supervision of the Public Guardian, requiring accounts and reports to be submitted to court, even as far as revoking the appointment of the attorney.  On top of all that of course criminal law could come into play if an attorney used his powers to affect a criminal act.

In short there is in place a significant body of law designed to protect a vulnerable adult against an attorney acting improperly – clients can be reassured on that point.

However, the main consideration in choosing an attorney is the honesty and integrity of that person.  Powers granted to such a person can make families’ lives so much easier should incapacity strike.

The product is actually a clever combination of a credit facility and an insurance – which pays out the normal up front costs of marketing if the property does not sell within the nine months.  On the other hand, if the property does sell within that period these costs would be paid out of the sale proceeds.  The seller would only be left paying for the service which costs £70 for up to £1000 of credit and £110 for up to £1250 worth of credit.  The policy would also pay the up front costs if a property had to be taken off the market for issues like serious illness or redundancy.

David Borrowman, Managing Partner of Caesar and Howie, welcomes this development.  “Many, would be sellers, are put off by the high costs of marketing a property now – particularly the cost of the Home Report.  We think the government should abandon Home Reports and the market will then improve.  But until that happens this new product at least will make it easier for people to test the market for sale of their house.”

Property Consultant John Renton, also welcomes the no sale no fee development.  “This will definitely be attractive to some house sellers in Scotland.  But it is important to be aware that conditions apply to the deal.  The seller must market at a price not in excess of the Home Report valuation, and must actively market the property throughout the nine month period.  In addition the house seller must accept reasonable marketing advice and reasonable offers.  But I think these conditions are relatively fair and if people wishing to sell their house in Scotland are realistic in the prices they seek this product will definitely help.”

However, this year the Scottish Legal Aid Board have already intimated an increase in civil applications of 24%.  This and the certainty of government cuts to come could mean that this generous benefit to pensioners could be under threat in the future.

David Borrowman, Managing Partner of Caesar and Howie, states “We believe  probably over 80% of Scottish pensioners could have their affairs put in order either free or at a significantly subsidised cost using legal aid.  Having these documents in place is massively helpful to families.  Powers of Attorney in particular, can save families the stress of court actions should a family member become unable to look after themselves.”

It is possible however that legal aid will be less easy to get in the future.  David continues “I understand the Scottish budget is protected for this year but will not be after that.  I hope legal aid is ring fenced since it helps the more vulnerable in our society – but who knows what may be cut in the future.  My advice to senior citizens is to act now – get these family care documents done whilst legal aid is available.”

Caesar and Howie welcome this move.  Senior Partner Ivor Klayman comments:

“This proposal is important and in my view cannot come quickly enough.  I’m sure there are capable non – solicitor Will Writers out there but that is not the point.  How can clients be sure that a Will Writer has the necessary legal expertise to write a Will validly and safely?  Only regulation can give some comfort here and I am all for that.”

Sarah Patrick, Executry Partner at Caesar and Howie agrees.  “I’m afraid I have seen some not great work done and high fees charged by non – professional Will Writers – even if this is not the story across the board.  But, I have had a long and arduous legal training – as do all lawyers – and I think that it is necessary to have this background to prepare Wills safely.”

Fortunately, commonsense has broken out in England and one of the first acts of the new Tory Liberal coalition is to dump the hated packs.- to the great relief of property professionals, buyers and sellers alike.  Of course this decision applies only in England in Wales and we Scots have to suffer on with our Home Reports.

In Scotland Home Reports were inflicted upon the unsuspecting public with a zeal which overtook logic, reason and evidence.  Politicians chose to ignore sensible advice from about 95% of all property professionals who argued firmly against Home Reports.  Excepted from this group of course were surveyors who realised they stood to make a killing from these reports and that is what they have been doing these last 18 months or so.

However, most of the rest of us, particularly house buyers and house sellers in Scotland have been suffering because of this ill thought out legislation.  The cost of selling has gone up, Home Reports are hated by most sellers because of their cost, distrusted by most buyers because the sellers produce them,  and are frequently also not accepted by many lenders.  The legislation has caused multiple surveys to return when that problem had long been solved by the unanimous adoption of the practice of offering “subject to survey”.  Worst of all in this difficult sales market some houses simply do not sell quickly and sellers decide to stay put.  The Home Reports in these cases have simply been a total waste of money and may even have never been read by anybody.  Concluding contracts has become slow and uncertain and the valuations in the reports themselves are often wildly out of date by the time a contract is concluded.

In short our house selling system is more expensive and less certain than it ever was in the old system.  Then the buyer instructed one survey from a surveyor approved by his or her lender at the time a deal was about to be done.  The old Scottish system was quick easy and relatively cheap – and well understood by all – in fact simply better all round for buyers, sellers and lenders.  But this system has been wrecked by Home Reports.

Is it too much too hope for that commonsense will break out in Scotland too?  Are any politicians or consumer groups honest enough to admit they got this one wrong?  Might some brave politicians unite in the spirit of the “new politics” and consign this damaging legislation to the bin?

David Borrowman

Managing Parter, Caesar and Howie

April 2010: As Scottish houses prices have plummeted by almost 7%* during 2009, figures show a marked rise in equity release in the same period, according to Caesar and Howie, the first Scottish member of the Equity Release Solicitors’ Alliance, (ERSA).

Comparing the first three months of 2010 with the same period in 2009, Caesar and Howie has seen a 55% increase in the number of equity release cases they advised on, supporting leading market figures which show that the value of equity release plans across Scotland increased by 102% from £4.5m (Q1 2009) to £9.1m (Q1 2010).**

This growth represents a sea-change for the Scottish equity release market. Until recently, equity release has not seen the kind of growth in Scotland that has been evident elsewhere in the UK. Older homeowners with adult children have traditionally chosen to downsize from a larger house to a smaller one. However, an increased awareness of the benefits of equity release, coupled with a drop in house prices that make downsizing a less viable option, has led it to become an increasingly popular alternative.

Another possible reason for the growth of equity release is increased regulation and protection in the sector, offering peace of mind to potential customers. Caesar and Howie’s membership of ERSA shows a commitment to specialist, impartial legal advice on equity release for all older homeowners considering an equity release plan.

Releasing equity allows homeowners to remain in their home alongside generating money which can be used to improve their standard of living in the absence of a large pension, or to spend on home improvements and life’s luxuries.

David Borrowman, Managing Partner of Caesar and Howie said;

“Over the last year, we have seen a marked growth in the Scottish equity release market which comes from an increased awareness of the benefits of equity release, an increased confidence in the sector and a housing market that makes downsizing a less viable option.”

“Roughly 95% of our cases over the past year have been down to enhancing “lifestyle choice”- in other words, to improve income during retirement by releasing capital from their homes.”

A theme of all the speeches was the lack of publicity given to many of the benefits available, as of right to senior citizens.  The speakers emphasised that this resulted in many benefits readily available not being taken up through lack of knowledge in the senior citizens community.  Justin Glass highlighted in particular the lack of take up by senior citizens of Attendance Allowance, a completely non means tested benefit which has transformed the lives of many older folk.  Justin forcefully made the point that this benefit was still not claimed by many senior citizens who were clearly entitled to receive it.  David Borrowman made a similar point, advising the audience of the generous legal aid available to pensioners in Scotland and yet not known to many.   David pointed out to the audience that Wills, Powers of Attorney and Living Wills could all be completed under legal aid and that according to the Scottish Legal Aid Board probably 80% of pensioners would qualify for financial help in preparing them.   

Margo MacDonald delighted the audience with an interesting speech, in which she mischievously passed on some of her inside knowledge of leading politicians and the running of the current election campaign. 

George Henderson OBE, called on all present to support the Pensioners Manifesto of the National Pensioners Convention and urged delegates to challenge all candidates in the election on the issues contained in the manifesto.

The gathering stimulated some spirited discussion on the issues affecting older people and many of the delegates left the conference resolved to make campaigning politicians aware of their views.

 “Where a family member becomes incapacitated, many families have to have someone appointed as guardian to look after the affairs of the incapacitated person.  It is not widely known that The Scottish Legal Aid system is very generous when it comes to granting legal aid for guardianships.  The vast majority of persons in need of guardianship are entitled to free legal aid and if a welfare appointment is sought at the same time, this is without any financial test or qualification.  This legal aid will pay for all of the costs incurred in applying for guardianship and intervention to deal with the welfare, assets and income of the person who is incapacitated.

Whilst I think that is a great system and one we should be proud of in this county, I think not enough people know about this entitlement.  Many thousands of pounds can be saved by using a solicitor geared up for legal aid for a guardianship action.  What’s even better is that there is virtually no delay in legal aid being granted in these cases – so no time is lost”.

Sadly, Sarah thinks many Scots families do not know the answer to these questions – nor do they even think about them.  “Actually the answers are quite scary” says Sarah.  “Residential care costs can exceed £600 per week and to be honest I do not think many families can afford to pay for that without selling assets.  In fact it is estimated that thousands of houses are sold in the UK each year which I think should be a worry for families.  But, the good news is in answer to the fourth question, there is at the moment a method available which has a good chance of stopping houses being sold to pay for care costs.  It is called a Discretionary Family Trust and we are finding that once families apply their minds to this difficult subject more and more are seeking to mitigate the effects of having to pay for care.  These trusts are therefore becoming more common.  Setting up a family trust early – before care costs are being incurred is what needs to be done.  I would urge all families with elderly members to think about this subject and plan for the future”.

For a completely free consultation on the legal issues about care costs please telephone  o845 8335500

 And ask for Sarah, Lesley or Martin

In practice for Scotland, however, this is effectively a cut for most if not all first time buyers.  But will this change stimulate a pretty subdued market?

Property professionals seem mostly to feel the change may help somewhat.

“In the property market the last two years have been full of mostly bad news – so anything positive is a bit of a help.  Certainly a big cost will be removed for many first time buyers – and that can only be good” says Sandy Macfarlane, mortgage broker at Caesar and Howie.  “But I’d like to see the Scottish government letting us know how much money they are going to make available under the Lift scheme this year.  That did help a lot of my clients last year and I hope it will do so again this year.  On balance if Lift monies come available again from April – with the stamp duty cut now  also in place – there should be more activity seen in the first time buyer sector.”

This view is confirmed by Sebastian Kedziora – who works with Caesar and Howie’s many Polish clients buying houses in Scotland and indeed in the UK.  “A large number of would be Polish buyers didn’t get the loans they wanted under Lift last year – because of the rationing of funds.  If new tranches of money become available under Lift this year I predict many more Poles will be buying houses in Scotland.”

See www.liftmortgage.co.uk

See www.kupdom.co.uk