Devon County Council

Code of Practice chapter 6; MCA ss5, 6, 7, 8.

• Someone who lacks capacity to manage their money will still need to use the services of others – hairdressers, cleaners, landlords etc. Anyone providing care and support to someone who lacks capacity to manage their own finances needs to be clear how that person’s money is managed. (Part 24 Helping people who lack capacity to manage their money)
• If someone has a Lasting Power of Attorney (Property and Affairs) or a Court appointed deputy (Property and Affairs) or an Enduring Power of Attorney in place, that person can make decisions about the person’s money and sign contracts on their behalf, acting as if they are that person. (Part 18 Lasting Powers of Attorney)
• If the person has made a contract before they lost capacity – for instance a tenancy agreement signed before the person developed dementia – the contract will continue.

If it is clearly in the person’s best interests (as determined using the Best Interests checklist s4 MCA) to spend the person’s money this will be covered by s5. This means there is legal protection for the person who spends the money of the person who lacks capacity to make that decision. (Code of Practice 6.58.) (Part 8 Best interests decisions)

• The Sale of Goods Act 1979 indicates that if someone who lacks capacity enters into a contract and the person providing the goods or services is aware that the person lacks capacity, the contract is not valid.
• However, s7 MCA modifies this. The person providing goods or services can claim a reasonable sum, regardless of the validity of the contract, if the goods or services are ‘necessary.’ (Part 24 Helping people who lack capacity to manage their money)
• People who lack capacity can be vulnerable to people selling things at the door or on the phone. If someone who lacks capacity is persuaded to agree to spend money on something inappropriate consider if the seller was aware of their lack of capacity. It might be that either the seller was aware of the lack of capacity or else it could be concluded that they did not make suitable efforts to ensure that the terms of the agreement were understood. It is then appropriate to consider if the goods are ‘necessary’. Does the person need double glazing or an encyclopaedia? There is no protection in law unless the goods can be shown to be necessary.

Tenancy Agreements:

• Newly developing ways of providing support to people sometimes require people who lack capacity to hold a tenancy. Supporting People schemes, for instance, enable individuals to receive support in their own homes; this can give more flexible and responsive support. However, this means that people can be required to hold a tenancy when they lack capacity to make decisions about their finances.
• There is some confusion about how the law applies to people who may lack capacity to sign a tenancy and how agreements about their housing can be made. It is therefore vitally important that any decisions are made on the basis of valid capacity assessments and that all decisions are fully recorded. If there is clear evidence of why decisions are made and actions taken it will be possible to justify that actions are taken in good faith, even if it is later found that the actions are unlawful. (Part 6 How to assess capacity; Part 8 Best interests decisions; Part 10 How to record decisions)
• If someone who may lack capacity needs to make a tenancy agreement the first thing is to be clear whether they have capacity to make this particular decision. A tenancy agreement can be a long and complex legal document – but the essential points are that it relates to where the person will live, that they agree to pay their rent and to look after their home, while the landlord agrees to see to repairs. Some people who may not be able to make some other decisions may be helped to understand this and will then be able to sign their own tenancy agreement. (Part 6 How to assess capacity)
• If there is a Lasting Power of Attorney (Property and Affairs) or an Enduring Power of Attorney or a Court appointed Property and Affairs Deputy, that person should sign the tenancy agreement. The tenancy will be between the landlord and the person who lacks capacity. (Part 18 Lasting Powers of Attorney)
• The landlord should never sign a tenancy agreement. This will not lead to a valid tenancy.
• The local authority has no general power to sign tenancies for people who lack capacity. If the local authority has been appointed to act as a Deputy for Property and Affairs then the local authority can sign the tenancy agreement.
• Under the common law ‘doctrine of necessaries’ it may be possible for someone who lacks capacity to hold a tenancy where there is no written agreement. If the person is able to maintain the tenancy – paying the rent, caring for the property, not acting in a way to cause nuisance – common law indicates that the ‘tenant’ owes suitable compensation to the landlord for occupying the property. However, this does not give the ‘tenant’ legal protection; only the Disability Discrimination Act could protect the person if the landlord sought unreasonably to evict them.
• It is poor practice ask someone who lacks capacity to make this decision to sign a tenancy agreement. However, the tenancy agreement will be presumed to be valid unless it is ‘avoided’. A tenancy is ‘avoided’ either by the person regaining capacity, or a Deputy, EPA or LPA withdrawing from the agreement, or by the person not maintaining the conditions of the tenancy. The Disability Discrimination Act could offer the person who lacks capacity some protection in this case.
• Family members are often asked to sign tenancy agreements. There are problems with this: the person who signs becomes the tenant. This may cause problems with claiming Housing Benefit or problems if the landlord needs to take legal action against the tenant.
• However, it appears that a decision maker can make a best interests decision about someone’s tenancy and can therefore sign a tenancy agreement. There would be legal protection under s5 MCA. However, there is some confusion: this relies on s7 allowing the use of the money of the person who lacks capacity to pay for the rent. There is no statement in MCA or the Code of Practice that explicitly describes housing as a ’necessary’ item. Common sense would indicate that housing is necessary and therefore a best interest decision can be made to sign a tenancy – but there is at the moment no legal protection for this position. (Part 8 Best interests decisions)