Monday 23 October 2017

Pressure on Government to plug gap in repossession legislation

Dearbhail McDonald and Fionnan Sheahan

THE Government has come under renewed pressure to plug a legal loophole that has halted home repossessions, following claims by Bank of Ireland that its property rights are being interfered with.

The bailed-out bank, which is involved in a high-profile loan dispute with former rugby star Frankie Sheahan, is challenging the interpretation of a 2009 law designed to streamline repossessions.

Two years ago repossessions ground to a halt after High Court Judge Ms Justice Elizabeth Dunne identified a loophole in the 2009 Land and Conveyancing Reform Act.

BOI Mortgage Bank claims if Ms Justice Dunne's interpretation of the 2009 mortgage law is upheld, the property rights of secured lenders are being interfered with in an "arbitrary and capricious" manner that is unconstitutional.

The Government, which this week warned that the mortgage system would "collapse" without the threat of repossession, was drawn into litigation after BOI served the Office of the Attorney General with notice that it is querying the constitutionality of the 2009 law.

The Irish Independent has learned that a "special case" hearing will take place tomorrow morning during which the State will be asked to outline its views on the High Court's interpretation of the 2009 law.

Last night Taoiseach Enda Kenny insisted the Government is dealing with the question of the loophole in the law because it was "being used by some lenders to say we can't settle".

Seeking the special case hearing, BOI has argued that the constitutional impact of the flawed law on the property rights of secured lenders was never aired in High Court cases which involved efforts to evict defaulting homeowners by three sub-prime mortgage lenders. Alternatively, it claims that if the interpretation of the 2009 law is correct, it is unconstitutional.

Demand

In her 2011 ruling, Ms Justice Dunne said lenders who took legal action after December 1, 2009, were not entitled to rely on a law dating back to 1964, which granted lenders a right to apply for repossession once the mortgage had fallen into arrears and final demand letters had been sent to borrowers.

That law was cancelled as a result of the 2009 legislation.

Banks can still pursue borrowers under the 2009 law in respect of mortgages issued after December 1, 2009.

Mr Sheahan, along with his brother Joey Sheahan, is expected to argue that BOI's power to appoint receivers over their buy-to-let business is invalid because the right to repossess has also been affected by the 2011 ruling.

The loans were advanced to the Sheahan brothers between 2005 and 2008.

Irish Independent

Also in Business