In a welcome move, the Irish Government recently published draft legislation which provides that certain previously repealed statutory provisions relating to banks’ powers of enforcement over secured property will continue to apply to all mortgages which were created prior to 1 December 2009.
The Bill has been introduced to address the uncertainty in the law which was created by the decision reached in the controversial Start Mortgages case. In that case, the judge ruled that the owner of a charge over registered land which was created before 1 December 2009 could only apply for an order for possession of that land in circumstances where repayment of the principal monies became due before 1 December 2009, and a demand for repayment had been made before sell and the right to overreach junior encumbrances on a sale.
The potential consequences of the Start Mortgages decision were wide-reaching and raised concerns for banks with regard not just to their ability to obtain an order for possession over registered land in respect of mortgages which were created before 1 December 2009, but also their ability to rely on other repealed statutory powers, such as the power to appoint a receiver, the power to sell and the right to overreach junior encumbrances on a sale.
A subsequent case, the McEnery case, distinguished the decision in the Start Mortgages case and ultimately provided that the statutory power to appoint a receiver had survived the repeal of the old legislation. However, in the absence of a decision from the Supreme Court, confusion remained as to which case would be followed. Therefore, the Government's decision to publish the Bill which, if passed into law, would allow banks (in respect of mortgages created prior to 1 December 2009) to continue to rely on repealed statutory powers to obtain an order for possession of registered land, to appoint a receiver, to sell, and to overreach junior encumbrances on a sale, is most welcome. It should be noted, however, that the Bill as currently drafted will not apply to any proceedings initiated prior to its coming into operation.
Potential Adjournment of Proceedings for Repossession of a Principal Private Residence
The Bill also proposes that court proceedings for repossession of a principal private residence may, in certain circumstances, be adjourned to enable the parties to consider whether a Personal Insolvency Arrangement under the new Personal Insolvency legislation would be a more appropriate course of action.
To date the Government has not given a time-frame within which it expects to enact the Bill into law. Given the current uncertainties facing banks in the exercise of various repealed statutory powers, the sooner the Bill is enacted and the Start Mortgages decision is consigned to history, the better.