The hidden dangers of owning property overseas: what you need to know to keep a roof over your head

Holiday home, lasting powers of attorney, property abroad, property overseas, POA

The hidden dangers of owning property overseas: what you need to know to keep a roof over your head

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3 minute read

Do you know what would happen if you had a catastrophic event while abroad, and you lost your mental capacity? Who would care for you and how? What would happen to your money and property?

Most people travel abroad for fun, friendship, experiences and enjoyment.

A lasting power of attorney (POA) allows you to appoint a different person to make decisions on your behalf. There are two types of POA: health and welfare, and property and financial. These documents could be used for your convenience when you are abroad or out of necessity if you are incapacitated. When needed, your appointed attorney is able to deal with hospitals, financial institutions and government organisations on your behalf. Setting up a POA in the UK will allow your attorney the correct powers to help you manage your UK affairs. However, if you have foreign affairs, a UK based POA document may not be enough. This blog addresses how you can use your UK POA abroad and whether a foreign POA is necessary. Further, it considers whether POAs from different jurisdictions can be used in England and Wales.

According to a 2018 survey by the ‘A Place in the Sun’ television show on Channel 4, the top ten destinations for Brits to buy a home abroad are:

  1. Spain
  2. France
  3. Portugal
  4. Italy
  5. USA (Florida)
  6. Cyprus
  7. Greece
  8. Malta
  9. Turkey
  10. Croatia

Exactly how many British people live abroad? Well, it’s hard to be exact. Data collated by the Office of National Statistics (ONS) and the UN puts it somewhere in the 900,000 to 1,300,000 range.

According to The Economist, in 2016 Brits took 45 million foreign vacations.

This blog doesn’t comment on any likely Brexit outcomes, which at the time of writing are either unclear or unknown.

Under the 2000 Hague Convention, signatory nations agreed that foreign POAs will be applied to provide powers of representation in their jurisdiction. Typically, in order to use a POA in a different jurisdiction, your attorney would need to use an apostille service, which would return the document with an apostille certificate. Your attorney may also need to have the POA ratified at their UK-based embassy or translated by the apostille service provider. While this may delay proceedings by a few days and could add extra stress to a difficult situation, your planning has probably saved further hardship. Unfortunately, a UK-based POA may not always be accepted abroad or its recognition may be delayed in a foreign jurisdiction. Likewise, in the UK, foreign POAs may not be accepted even with an apostille certificate.

Foreign countries may grant different powers to a POA and may reject a UK-based POA. Further judging capacity is another potential minefield when applying for a UK-based POA to be accepted in a foreign jurisdiction. A notary and registrar in a foreign jurisdiction may even be at odds over whether the requirements of capacity and scope of a UK POA are equivalent to a foreign POA. Legal wrangling and bureaucratic delays could cause severe difficulties even with an apostille certificate and embassy ratification. This is exactly what a UK-based POA aims to avoid.

As an example, a 2016 Spanish legal dispute ended with a UK-based POA being rejected during a property purchase. Moreover, a Canadian POA was not accepted by the Court of Protection in the UK as it had not been made or approved by a foreign court. Under duress, these legal setbacks can cause significant and needless problems. Rather than expose you or your loved ones to difficulties in times of stress, it is far better to seek advice abroad or from a UK-based foreign qualified legal professional for the countries where you have property or where you spend a great deal of time.

As a final note, Scotland and Northern Ireland are distinct jurisdictions with different processes for setting up a POA. Even within the UK, there is potential for medical facilities and financial organisations that are not based in England and Wales to not automatically accept documents drafted under the Court of Protection. While this may be an extreme example, it does highlight the need for you to consider your own circumstances. Whether you own property in France, enjoy winters in Florida, or even split time between England and Scotland, consider taking legal advice in the appropriate jurisdiction. For the time and money spent doing so, protecting your family from undue stress in difficult circumstances is a relative bargain. Read Capital's blog on 5 reasons why you should have POA here. 

If you would like to speak to your financial planner about arranging a Lasting Powers of Attorney, please contact Capital today.

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