by Jackie Buckley October-01-2013 in Property
The Land and Conveyancing Law Reform Act 2013 (“the 2013 Act”) was enacted on 24 July 2013 and provides much welcome relief to Lenders whose security was affected by the repeal of certain statutory powers in the Land and Conveyancing Law Reform Act 2009 (“the 2009 Act”) and the subsequent decision in Start Mortgages Ltd –v- Gunn.
Background
The problem for lenders arose in relation to registered land as the only way to get possession of property previously on a summary basis was under section 62(7) of the Registration of Title Act 1964. This section provided that when repayment of the principal money had become due, the registered owner of the charge could apply to the court in a summary manner for possession and if the court thought it proper, it could grant an order for possession.
Difficulties arose when the 2009 Act was enacted as it repealed section 62(7) and the section was not substituted into the new legislation. The provisions of the 2009 Act whereby the bank could apply to court for an order for possession only applied to mortgages created after 1 December 2009. This meant that there was a lacuna in the law as there was no means for banks to apply to court for possession of registered property if the mortgage was entered into before 1 December 2009.
The Start Mortgages decision then left lenders in an extremely difficult position as lenders could only obtain an order for possession of registered property where proceedings were instituted before 1 December 2009, where repayment of the money became due before 1 December 2009 and a demand for repayment of the principal monies had been made before 1 December 2009. Whilst this decision was distinguished at by subsequent cases such as EBS –v- Gillespie and McEnery –v- Sheahan, the decision still left lenders in an extremely difficult and unclear position.
2013 Act
The 2013 Act confirms the position that applied prior to the enactment of the 2009 Act so that the legislation which was repealed by the 2009 Act will continue to apply to mortgages created before 1 December 2009. Sections 2 and 3 of the 2013 Act came into operation on 31 July 2013.
Section 1 of the 2013 Act provides that the statutory provisions which had been repealed by the 2009 Act can still be invoked or exercised as if they had not been repealed. These statutory provisions include certain sections of the Conveyancing Acts 1881 to 1911 and Registration of Title Act 1964. Section 1 will only apply to mortgages created prior to 1 December 2009. Any mortgages created after 1 December 2009 will be governed by the provisions of the 2009 Act.
Section 2 deals with cases where lenders have initiated repossession proceedings in relation to a Borrower’s principal private residence. The section provides that a court may adjourn proceedings for repossession for up to two months to allow the borrower to consult with a personal insolvency practitioner under the Personal Insolvency Act 2012. In deciding whether to grant an adjournment, the court will look at the conduct of the parties, whether the borrower has made any payments to the lender in the last 12 months, whether the possession proceedings had been adjourned previously and whether the application to adjourn could be seen as an attempt by the borrower to delay proceedings. This section applies to all mortgages whether they were created prior to 1 December 2009 or after.
Section 3 provides that all actions for repossession in respect of a mortgage created before 1 December 2009 must be taken in the Circuit Court.
In conclusion, the process for lenders to gain possession of properties where the borrower has defaulted on its loan has now become much simpler and the difficulties that arose by the enactment of the 2009 Act and subsequent case law have now been removed. This is certainly a welcome relief for Lenders but not for those borrowers who have defaulted on their mortgages as the risk of the Bank repossessing their homes has increased.
Laura Byrne, Solicitor
Jackie Buckley, Partner
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About the Author
Jackie Buckley
Jackie is Head of the Property team at Hayes solicitors. She is a highly experienced adviser to clients in the banking, public and retail sectors on all aspects of the sale, purchase, leasing, development and financing of properties. She has extensive experience of advising landlords and tenants in insolvency situations and has advised in recent high profile examinerships.