“New” considerations introduced by legislation for Circuit Court Judges to assess in respect of borrowers' private principal residences
“New” considerations introduced by legislation for Circuit Court Judges to assess in respect of borrowers’ private principal residences
The Land and Conveyancing Law Reform (Amendment) Act 2019 has been signed into law and is due to commence before the start of the next Circuit Court term. The aim of the 2019 Act, which amends the Land and Conveyancing Law Reform (Amendment) Act 2013, is to provide further protections for homeowners in mortgage arrears who are faced with possession proceedings in respect of their principal private residences.
The position at the moment is that under section 2 of the 2013 Act the Court has the discretion to adjourn possession proceedings of its own motion if it considers it appropriate to do so (section 2 (2)(a)) . Further, under section 2 (2)(b), the Court has the power to adjourn the proceedings for a period of two months to enable a borrower to consult with a personal insolvency practitioner, and where appropriate to instruct a PIP to make a proposal for a personal insolvency arrangement under the Personal Insolvency Acts 2012-2015.
While the provisions of the 2013 Act are maintained, the aim of the 2019 Act is to broaden the Court's discretion when deciding whether to make an Order for possession in respect of a borrower's principal private residence or to adjourn the proceedings to allow a borrower more time to consult with a PIP.
Section 3 of the 2019 Act is the key section which inserts a new section 2A into the 2013 Act.
Section 2A applies in the following cases:
where the Court of its own motion has adjourned proceedings under section 2 of the 2013 Act but no PIA has been brought about, or
where the Court refused to adjourn proceedings based on an application under section 2(2)(b), or acceded to an adjournment, and no PIA has been implemented;
where, prior to or following the commencement of the proceedings, the borrower has engaged the services of a PIP to assist in the resolution of his or her mortgage arrears problem however no PIA has been effectuated; or
the borrower has participated in good faith in a designated scheme.
Under the 2019 Act, the Court must take into account a range of new factors when considering whether or not to grant an Order for possession in respect of a borrower's principal private residence and may take these factors into account when considering whether to make any other order it considers appropriate in the circumstances. Many of the stated factors are ones which Judges have previously taken into consideration without the aid of legislation.
It is important that any lender seeking to enforce a mortgage is mindful of the provisions of the 2019 Act when progressing possession proceedings before the Courts, particularly where the response of the lender to proposals from borrowers and the conduct of the lender in seeking a sustainable solution with the borrower will come under the spotlight.