Devising a mechanism to achieve an innovative and flexible restriction on property title

Background

Mr. E had an English Court of Protection Order against him due to his incapacity to make decisions. Two solicitors were appointed as his deputies. On medical advice to move to a warmer climate, his deputies and family found a property in Cyprus.

While Mr. E’s UK assets were under the deputies' control per the English Court of Protection Order, this control did not extend to Cyprus. This gap presented a risk that Mr. E might sell the Cypriot property and take the proceeds, a scenario his family and deputies wanted to prevent.

Challenges in Cyprus

In the UK, deputies can register a Court of Protection order on property title deeds, preventing unauthorized transfers. However, Cyprus lacks similar legal provisions. Thus, we needed an innovative approach to achieve the same protective effect under Cypriot law.

Devising a Plan

To replicate the UK protections, we registered the English Court of Protection Order in Cyprus as a foreign judgment, giving it local effect. We then established a specific trust approved by the deputies, who also served as trustees. This trust restricted Mr. E's ability to sell the property but allowed him to use it freely.

A critical issue was preventing Mr. E from using the rule in Saunders v Vautier, which allows trust beneficiaries to terminate the trust. To mitigate this, we included a limitation in the trust deed and attached the English Court of Protection and Cypriot Court orders to enforce it.

Ensuring Compliance

We added a restriction on the alienation of the trust's beneficial interest, contingent on the deputies' approval, as long as Mr. E remained under the Court of Protection Order. This measure was crucial given the Cypriot Land Registry's inexperience with trust matters.

Conclusion

Ultimately, we created a quasi-proprietary restriction on the property, aligning with the deputies' obligations. Mr. E moved to Cyprus as advised, with his family assured that the property could not be sold without their knowledge.