New legislation aims to provide further protections for homeowners in mortgage arrears who are facing the prospect of repossession proceedings

The Land and Conveyancing Law Reform (Amendment) Bill 2019 was published by the Minister for Justice and Equality, Charlie Flanagan T.D., on 28thFebruary 2019 and is currently being considered by the Oireachtas. If enacted, the Bill will expand on the range of matters the Court must take into consideration when engaging in repossession proceedings and provide borrowers with more protection where their private property is liable to be repossessed.

What will this Bill change?

The principal objective of this Bill is to provide further protections for homeowners in mortgage arrears who are facing the prospect of repossession proceedings.  It does so by broadening the range of matters that a Court must take into account when deciding whether to grant a possession order to a lending institution in respect of a borrower’s principal private residence.

The Bill proposes the insertion of a new section into the Land and Conveyancing Law Reform Act 2013 to address the situation that arises when a borrower is unable to avail of an insolvency remedy under the provisions of the 2013 Act.

The 2013 Act seeks actively to encourage the remedy of a Personal Insolvency Arrangement (PIA) under the Personal Insolvency Act 2012, as an alternative to the repossession remedy, thereby allowing the borrower, and any dependents, to remain in his or her principal private residence. However, adjournment of the court proceedings under the 2013 Act, to permit examination of a possible PIA as an alternative to repossession, may not lead to a successful outcome in every case, for various reasons.

Court considerations

The proposed section would provide that the Court, when considering an application for a possession order in such a case, shall have regard to the following factors:

  • the overall proportionality of the application for a repossession order;
  • the circumstances of those resident in the property as their principal private residence;
  • the details of, and responses to, any proposals put forward by either party which would enable the borrower to remain in the property, including participation in a Government scheme for distressed mortgage holders;
  • the conduct of the parties to the mortgage in attempting to agree a resolution of the arrears of the mortgage;
  • where the mortgagee is not the original mortgagee that granted the loan or mortgage to the borrower, the amount paid for the purchase of the loan or mortgage by reference to the amount of debt outstanding in respect of the loan or mortgage; and
  • such additional matters as it considers appropriate.

Additional impacts

The Bill also provides that a Court may have regard to the aforementioned factors when it is making any other appropriate order.

Judges will be able to consider, how a repossession would affect householders’ physical and mental health. They will also be permitted to examine alternative options such as the mortgage-to-rent scheme.

It remains to be seen how the protections proposed by the Bill, will work in practice, but any party seeking to enforce a mortgage will need to be mindful of its provisions.

For further information please contact:

Joan Byrne,

Senior Associate, Commercial Property Department