Many of you will have seen the media reports last night and today in relation to promised legislative intervention to resolve the issues created by the decision in the Start Mortgages case.
Regular readers will also know that those difficulties have already been significantly ameliorated by a series of other court decisions so that the only substantial problem which remains is that it is not possible for a mortgagee to apply to court on a summary basis for possession of registered land.
In addition, there remains a slight market concern, particularly among purchasers' solicitors, with respect to the ability of a mortgagee who is selling to overreach subsequent charges or judgment mortgages in relation to unregistered land, although we think the better view is that this issue is also resolved.
These limited remaining difficulties could be easily resolved by very simple legislative intervention which would allow for summary procedures to be available for repossession actions and would clarify that mortgagees can sell, free of subsequent charges or judgment mortgages.
What is now proposed?
The media comment flows from a term of the revised memorandum of understanding between Ireland and the Troika (the IMF, the EU and the ECB). The relevant amendment states:
"Having secured adequate protections for debtors' principle private residence through the enactment of the Personal Insolvency Bill, the authorities will introduce legislation remedying the issues identified by case law in the 2009 Land and Conveyancing Law Reform Act so as to remove unintended constraints on banks to realise the value of loan collateral under certain circumstances."
It appears from the above that:
- Nothing will happen until the Personal Insolvency Bill becomes law and is commenced.
- Any amendment may have specific provisions restricting it to properties other than the family home, although this would be cumbersome and probably unnecessary in light of the Personal Insolvency Bill.
Comment
A legislative resolution of these issues is long overdue and should be good for both banks and borrowers. The proper role of the law in relation to repossessions and enforcements in general should be to ensure that the process is quick and cheap, without compromising justice. Additional expense caused by delay and cumbersome process is simply suffered by banks and then added to borrowers' obligations.
Where properties other than the family home are concerned, it is difficult to see any social purpose in making the process of a lender recovering possession of the property long and expensive. Different social considerations obviously apply to the family home and these can be addressed in the Personal Insolvency Bill, when enacted.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
