Mortgages and repossession in Irish land law

The principle

A mortgage secures a debt: the lender is the mortgagee, the borrower the mortgagor.

Creating a mortgage

In Bank of Ireland Mortgage Bank v Cody [2021] 2 IR 381 IE · Supreme Court Baker J explained that unregistered land was assured to the mortgagee, the legal estate carrying the right to possession, whereas a charge is only a folio entry.

Section 89 of the Land and Conveyancing Law Reform Act 2009 allows one method only: from 1 December 2009 a charge by deed, for unregistered and registered land alike. Section 89(7) makes a purported Welsh mortgage void; s.89(6) preserves equitable mortgages. For registered land, section 62(2) of the Registration of Title Act 1964 as amended requires an instrument of charge in the prescribed form, conferring no interest until registration; s.62(6) then makes it a Part 10 legal mortgage with power of sale.

Equitable mortgages

In Promontoria (Oyster) DAC v Hannon [2019] IESC 49 IE · Supreme Court it was held that section 73(3) of the Registration of Deeds and Title Act 2006 ended equitable mortgages by deposit of a land certificate.

The equity of redemption and clogs on it

A mortgagor who missed the legal redemption date kept an equitable right to redeem; that right, with the borrower's other retained rights, is the equity of redemption. In Dellway Investments Ltd v NAMA [2011] 4 IR 1 IE · Supreme Court Hardiman J called it an equitable estate amounting to ownership subject to the mortgage, with the selling mortgagee accountable for any surplus.

Redemption must return the property free of the mortgage's conditions, so equity will not enforce a clog or fetter. In Browne v Ryan [1901] 2 IR 653 IE · pre-1922 the borrower also agreed to sell the land within a year through the mortgagee, an auctioneer, or pay him five per cent commission; that was void as a fetter. Section 92 of the 2009 Act is the statutory version: a housing loan mortgage may be redeemed without paying money due under another mortgage to the same mortgagee.

The mortgagee's remedies

Under section 96 the powers vest on creation, are exercisable only to protect the property or realise the security, and bind a housing loan mortgage whatever its terms. Section 96(2) abolishes foreclosure.

Possession. Section 97(1) bars possession without a court order unless the mortgagor consents in writing not more than seven days beforehand; s.97(2) lets the court order possession on terms it thinks fit. In possession, s.99(1) requires sale under section 100 within a reasonable time, or a lease under section 112 with the rent applied to the debt; s.99(2) disapplies section 34 of the Statute of Limitations 1957.

Sale and receiver. Section 100(1) carries across three preconditions from the Conveyancing Act 1881 — three months' default after a notice requiring payment, interest two months unpaid, or breach of some other provision — and adds 28 days' notice in the prescribed form. Sale needs a court order under s.100(3) unless the mortgagor consents in writing within seven days; s.105(2) gives damages for improper exercise. Section 108 allows a receiver on the same preconditions; section 113 requires any lease to reserve the best rent reasonably obtainable.

The repossession gap and the 2013 Act

Part 10 reaches only mortgages created on or after 1 December 2009; earlier ones stayed with the Conveyancing Acts 1881 to 1911 and the 1964 Act, where a gap opened. A registered chargeholder's summary right to possession sat in section 62(7) of the Registration of Title Act 1964, repealed on the assumption that section 27 of the Interpretation Act 2005 would preserve existing rights. In Start Mortgages Ltd v Gunn [2011] IEHC 275 IE · High Court Dunne J held that after the repeal a chargeholder could not seek summary possession unless the principal had become due before 1 December 2009.

Each pre-2009 case turned on the mortgage's wording. In EBS Limited v Gillespie [2012] IEHC 243 IE · High Court Laffoy J held no demand was required, an event of default being enough. In GE Capital Woodchester Homeloans Limited v Reade [2012] IEHC 363 IE · High Court and ACC Bank v Fagan (A Bankrupt) [2013] IEHC 346 IE · High Court, Gunn was applied and possession refused.

Section 1 of the Land and Conveyancing Law Reform Act 2013 closed the gap: for a mortgage created before 1 December 2009 the repealed and amended provisions apply as if untouched. Section 1(5) excludes proceedings begun earlier, and section 4 answers the limitation problem.

Possession of a principal private residence

Section 3 of the 2013 Act sends possession proceedings over a principal private residence to the Circuit Court where the mortgage predates 1 December 2009. Section 2 lets the court adjourn for up to two months so a relevant person can consult a personal insolvency practitioner about a Personal Insolvency Arrangement, and again where significant progress is made.

Section 2A, inserted by the Land and Conveyancing Law Reform (Amendment) Act 2019, requires the court to weigh whether a possession order would be proportionate: the position of the mortgagor and any dependants, each side's proposals and conduct, against the sum outstanding, the arrears and the advised market value.

The Code of Conduct on Mortgage Arrears, made under section 117 of the Central Bank Act 1989, generally stops a lender starting proceedings for at least eight months. In Irish Life and Permanent plc v Dunne; Irish Life and Permanent plc v Dunphy [2015] IESC 46; [2016] 1 IR 92 IE · Supreme Court Clarke J held the Code forms part of the law, but only breach of the moratorium affects a lender's entitlement to possession.

Statutory basis

• s.89 LCLRA 2009 — charge by deed only.
• s.62(2) and s.62(6) RTA 1964 — charge instrument; on registration a Part 10 legal mortgage.
• s.91, s.92, s.94 — title documents, no consolidation against a housing loan, action for sale.
• s.96 — vesting of the powers; foreclosure abolished.
• s.97, s.98, s.99 — possession by court order; abandoned property; sale or lease.
• s.100, s.105, s.108, s.112, s.113 — sale, purchasers, receivers, leasing.
• s.2(1) Consumer Credit Act 1995 — the housing loan definition.
• s.1, s.2, s.2A, s.3, s.4 of the 2013 Act — revival, adjournment, proportionality, Circuit Court.

Key authorities

• Start Mortgages Ltd v Gunn [2011] IEHC 275 IE · High Court — no summary possession unless the principal fell due before 1 December 2009.
• Bank of Ireland Mortgage Bank v Cody [2021] 2 IR 381 IE · Supreme Court — unregistered land was assured to the mortgagee; a registered charge is only a folio entry.
• Dellway Investments Ltd v NAMA [2011] 4 IR 1 IE · Supreme Court — the equity of redemption is ownership subject to the mortgage.
• Browne v Ryan [1901] 2 IR 653 IE · pre-1922 — a term tying the borrower to sell through the mortgagee was void as a fetter.
• Irish Life and Permanent plc v Dunne; Irish Life and Permanent plc v Dunphy [2015] IESC 46; [2016] 1 IR 92 IE · Supreme Court — the Code is law, but only breach of the moratorium defeats possession.

How it is examined

The cue is a date plus a default: arrears, a demand, then possession proceedings or a receiver.

Work in order: the date of creation, which decides between the Conveyancing Acts with the 1964 Act, revived by s.1 of the 2013 Act, and Part 10; registered or unregistered land; whether it is a housing loan; which remedy and its preconditions; whether it is a principal private residence; and the moratorium.

Related Land Law notes: registration of title · judgment mortgages and fraudulent dispositions · licences and the family home · all free Land Law notes.