From 1 March 2012, the Property Registration Authority (“PRA”) has introduced a new one page form of charge that must be used for taking security over registered land (with very limited exceptions). This requirement applies to commercial and residential mortgages a similar approach to that adopted by the Irish Banking Federation for the creation of mortgages over residential property.
For commercial mortgages, both the one page form and the more familiar mortgage/debenture should be entered into by a mortgagor at the same time. For residential mortgages, just the one page form is needed, although a set of mortgage conditions should be lodged with the PRA.
On or after 1 March 2012, a charge over registered land (whether residential or commercial) must be created using a new one page form of charge prescribed by the PRA (with very limited exceptions that will not be relevant to most commercial or residential loans).
Where the charge is by way of a commercial mortgage/debenture, a Form 115 must be used, together with a long form mortgage/ debenture (referred to in the form) and where the charge is by way of a residential mortgage, a Form 114 must be used.
Lenders will need to review, and probably adapt, their standard forms of mortgage/ debenture (or in the case of residential lenders, standard mortgage conditions) in light of the new PRA requirement.
The changes are:
- Commercial Mortgages and Debentures: the Form 115 (present and future advances) is a simple one-page document which creates a charge by deed over registered land and is intended as a supplement to the principal deed of commercial mortgage or debenture.
Although the mortgagor will have to execute both documents at the same time, only the (single-page) Form 115 will be lodged with the PRA; the debenture or commercial mortgage will be retained by the lender. A separate Form C1 for each mortgage/debenture and each Form 115 entered into by a company should be filed with the CRO.
- Residential Mortgages: the Form 114 (present and future advances) is also a simple one-page document which creates a charge by deed over registered land which incorporates a set of mortgage conditions, contained in a separate document filed with the PRA. The mortgage conditions would be accessible on the PRA website, as currently. The residential form is based on the Irish Banking Federation model and, in effect, gives statutory validation to the IBF template.
The new requirements only apply in respect of registered land, and are implemented by Rule 5 of the Land Registration Rules 2011. There is no form of mortgage prescribed for unregistered land.