5 Elder L. Rev. 1 (2006)

handle is hein.journals/elr5 and id is 1 raw text is: UNDUE INFLUENCE, THE ELDERLY AND EQUITY
RELEASE SCHEMES
By Dr Lorna Fox O'Mahony and Dr James Devenney
(1) INTRODUCTION
Issues relating to the elderly, their homes and the transactions they enter into have
attracted considerable attention, both in England and Wales and elsewhere, in recent
years.1 One central concern has related to the dramatic increase in the use of equity
* School of Law, University of Durham. This paper develops work which was presented at the 7th
Biennial Conference on Property Law (Queen's College, Cambridge, 2008) and which will be
published in Modern Studies in Property Law - Volume 5 (Hart Publishing, Oxford, 2009). We are
grateful for the constructive comments of the anonymous referee.
'Much of the policy discussion in England and Wales has focused on regulation of the financial
services market targeted at the elderly, as discussed in section 2. In Ireland, the Law Reform
Commission has published a consultation paper on Law and the Elderly which included a section on
'Protection against Financial Abuse' in relation to both products aimed at elderly people, and issues
relating to undue influence and unconscionable transactions in other contracts involving property.
Although these aspects of the Law Reform Commission's work on vulnerable adults have not yet been
implemented, further work in this area is clearly identified in the Commission's recently published
'Third Programme of Work (2007-2014)'. The second programme of law reform identified by the Irish
Law Reform Commission (2000-2007) identified, under 'Vulnerable Groups and the Law'
consideration of law and the elderly, including the legal protection of older persons transferring assets
and 'advance care directives'; this item was asterisked as a priority for the Commission in this period.
See Second Programme for Examination of Certain Branches of the Law with a View to their Reform:
2000   2007, available online at http:i/www.lawreform.ieilawunderreview/secondproglawreform.htm.
The Commission published a consultation paper, Consultation Paper on Law and the Elderly (LRC CP
23 - 2003), in 2003. Although the Report on Vulnerable Adults and the Law (LRC 83 - 2006) was
published in 2006, this focused primarily on issues relating to capacity and assisted-decision making
amongst vulnerable adults, and did not specifically address issues of financial abuse. A recent upsurge
in the use of equity release products in Australia also prompted the Australian Securities and
Investments Commission to publish a report in 2005 to highlight the risk associated with trading-in the
equity in one's owner-occupied home; Australian Securities and Investment Commission, Equity
release products (Report 59, November 2005), available online at
http://wvww.asic.gov.auifido/fido.nsf  kuppdf/FIDO+PDFWopendocument&key-Equitv release repo
Lpdf; while in the US, considerable academic attention has focused on the use of reverse mortgage
products, and other forms of equity release amongst the elderly; see for example, Nandinee K. Kutty,
'The Scope for Poverty Alleviation among Elderly Home-owners in the United States through Reverse
Mortgages', (1998) 35 Urban Studies 113-129; Isaac F. Megbolugbe, Jarjisu Sa-Aadu, and James D.
Shilling, 'Oh, Yes, the Elderly Will Reduce Housing Equity under the Right Circumstances', (1999) 9
Journal of Housing Research 53; Roberto G. Quercia, 'House Value Appreciation among Older
Homeowners: Implications for Reverse Mortgage Programs' (1999) 9 Journal of Housing Research
201; S Merrill, M Finkel & N Kutty, 'Beneficiaries from reverse mortgage products for elderly home-
owners: an analysis of American housing survey data', (1994) 22 Journal of the American Real Estate
and Urban Economics Association 257; U. S. Department of Housing and Urban Development, 'No
Place Like Home: A Report to Congress on FHA's Home Equity Conversion Mortgage Program',

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