If a person lacks the mental capacity to sign the tenancy agreement or terminate it, then anyone intending to sign on the person’s behalf can only do so if they are authorised to do so by the Court of Protection (unless the person had capacity to make a power of attorney and has done so)
In law, a tenancy taken on by someone whose lack of capacity is known by landlord is “voidable”. The person has the same rights as any other tenant and the same obligations unless the tenancy is voided. Only the tenant or someone acting on behalf of the tenant with the legal authority to do so (an attorney or a person / deputy appointed by the Court of Protection) can void a tenancy by showing that at the time the tenancy was taken on, the tenant did not have the capacity to make the decision and the arrangement was not in their best interests, When the tenancy is voided the tenant is no longer bound by the terms of the contract. Voiding a tenancy for lack of capacity is therefore possible at law, but it is rare that a tenant or their attorney, person / deputy appointed by the Court will decide to do this unless they wanted to stop the arrangement because if they did they would not have any right to remain in the property and would in practice simply be giving notice in the normal way. Therefore, the fact that the tenancy is voidable is unlikely to have any practical impact if the tenant is receiving proper support to manage their tenancy. They are entitled to Housing Benefit to pay their rent in the usual way regardless of their capacity.
A tenancy agreement requires two parties – the landlord and the tenant. Here the claimant was not, and was incapable of being, a party to any agreement. Regardless of her capacity to consent, she could not and did not communicate any agreement to the tenancy and I infer that she could never have been asked to. There simply was no such agreement, and therefore no liability to pay rent.
even if on the face of it there has been a contract, it is void if the one contracting party knew that the other contracting party lacked sufficient mental capacity to reach such an agreement, because the first contracting party would have been aware that the other party was not consenting to the agreement.
Over to you…
[Update by Nearly Legal: 8/10/11.
Since the initial post and the comments below. I have now had a chance to work through the case law, in particular Hart v O’Connor and Imperial Loan Co v Stone  1 QB 599. I’ve also taken a look at CH/2121/2006 and CH/663/2003.
My view is that Wychavon is wrongly decided.
The position in common law and equity arising out of the Privy Council decision in Hart v O’Connor is that a contract with someone lacking capacity to enter such a contract is voidable (not void) by the person lacking capacity if the other party was aware of their lack of capacity.
If the other party was not aware of the person’s lack of capacity, the contract is not voidable on that basis, but only on the usual equitable grounds (fraud, misrepresentation etc,).
Judge Mark’s interpretation of Hart v O’Connor is in error in confusing ‘void’ and ‘voidable’. This leads to the great difficulty evident in the Judge’s efforts in distinguishing CH/2121/2006 and CH/663/2003.
To this extent, I agree with the DoH guidance and the advice the DWP received set out in Alicia’s comment below.]
Hello, a non-legal bod here from Housing Options!
So starting point is that thousands of people without mental capacity have tenancies that protect them but not the landlord. Mostly the landlords accept that this is not a major risk in practice (given that most people who lack capacity have full time care and therefore the support to manage a tenancy)and issue tenancies. If the landlord (understandably) insists on a contract that protects both the tenant and landlord then we advise on going through the COP process.
On the issue of HB being paid to people who lack capacity, the following is an extract of a letter from the DWP in May this year that will interest you;
“Our lawyer’s view is that the decision in CH/171/2011 is incorrect in not following the previous decisions in CH/2121/2006 and CH/663/2003.
The correct legal position is, in their view, that set out in the extract from the First-tier Tribunal’s decision in paragraph 5 of the decision in CH/171/2011, i.e. that a party can enter into a legally binding contract to make payments in respect of their occupation of a dwelling without necessarily signing anything and that the father as landlord could bind his claimant daughter to the terms and conditions of the contract, subject to the contract being voidable at the daughter’s option. But the contract was not void from the outset. Therefore there was an agreement/contract at the time of the claim for HB and under it the daughter was liable to make payments in respect of a dwelling in Great Britain which she occupied as her home.
Also, in CH/2121/2006, it was stated that there is no minimum level of understanding below which a contract is void from the outset. At paragraph 8 Judge Mark misinterprets Hart v O’Connor 1985 [AC] 1000, which confirmed that a contract was voidable but not void if it could be shown that the competent contracting party knew of the lack of capacity of the other party. And Judge Mark does not address section 53 of the Law of Property Act 1925 which enables an interest of land to be created by writing signed by the person creating or conveying the interest, i.e.
the landlord. The tenancy agreement, even though only signed by one party, created an immediate interest in land, not a future interest.
The authorities cited above do not indicate that there is a requirement for a Court of Protection appointment or other legal authority to allow a party to make another liable under an agreement where the other party lacks capacity. Judge Mark in paragraph 6 does not cite any authority for his assertion that the parents could only bind the claimant daughter with the authority of the Court of Protection. The appointment of the mother in February 2010 under an order made by the Court of Protection giving her power to act in certain respects on behalf of the claimant is relevant if the mother wished to sign the tenancy agreement on behalf of her daughter.
Therefore lawyers don’t think CH/171/2011 overturns the long held understanding of the law in England and Wales relating to contracts and capacity. ”
To answer your questions, I don’t think Wychavon was rightly decided on the basis that it did not take the MCA into account. It also does not take into account established case principles around void and voidable contracts. We are hoping for a review of this case on that basis.
The alternative arrangements are using the best interest decision making process in the MCA- if there are problems then they will arise at this point and COP can then be used.
It is great that this issue is being raised and discussed- many thanks!