In Bank of Scotland Plc v Foster and Foster 2014 NICh 18, the court of Northern Ireland considered, amongst other things, whether a mortgage deed is invalid pursuant to s.2 Law of Property (Miscellaneous Provisions) Act 1989 if it isn’t signed by both borrower and lender.
The appellants appealed against the court's decision to grant an order for possession on a number of grounds, including:
- That there was a failure to comply with contract law because of a lack of consideration
- That the loan had been converted into stock and was no longer a loan
- That the mortgage deed was invalid as it was not signed by the bank, in breach of s.2 Law of Property (Miscellaneous Provisions) Act 1989 (often described as the 'registration gap' argument).
In relation to the first argument, the court pointed out that the appellants had signed a mortgage deed and that no consideration is required for a deed. In any event, there was consideration for the contract as the bank had lent the appellants £198,000 which the appellants used to purchase the property.
The second argument was dismissed on the grounds that there was 'not a shred of evidence to support such a claim' and that it was a wholly unparticularised allegation.
The third allegation was dismissed on the grounds that the Law of Property (Miscellaneous Provisions) Act 1989 does not apply in Northern Ireland.
There are a number of internet sites which claim to offer borrowers a complete defence to possession claims. These defences are often lengthy and highly confusing, and sometimes erroneously quote US law. The 'registration gap' argument, is usually at the heart of them. Whilst some courts appear to be more alive to the hopelessness of these defences, they can sometimes lead to an adjournment of the initial possession hearing, in which the court only has five minutes to consider the matter. It is important that if faced with one of these defences, your advocates are sufficiently prepared to point out to the court, the lack of merit in the 'registration gap' argument.