Saturday 25 January 2020

Banks face €5m legal bill as bid to take homes put on hold

Dearbhail McDonald Legal Editor

MORE than 1,000 repossession cases left "in limbo" after a loophole was identified in the law may have to be withdrawn from the courts by the banks.

The move could cost the banks almost €5m in legal fees alone, a cost that debt advisers say should not be borne by borrowers whose home- eviction actions have been suspended.

More than 1,000 repossession actions, with average legal costs of €40,000 for homeowners in default on their mortgages, have been in limbo since the so-called Dunne ruling in 2011, which identified a loophole in the 2009 Land and Conveyancing Reform Act.

The banks have scrambled to protect their right to apply for repossession since the Dunne ruling, which is under appeal to the Supreme Court by various parties.

The Supreme Court will separately be asked to consider the loophole as well as a number of other questions surrounding home evictions in a case that a senior judge says has "a systemic importance for the entire mortgage market".

The Government has finally moved to plug the loophole with the publication of the Land and Conveyancing Reform Bill 2013.

STANDSTILL

But Justice Minister Alan Shatter has confirmed that the Land and Conveyancing Law Bill 2013 will only apply to future cases, leaving more than 1,100 actions at a standstill.

If the cases are withdrawn, borrowers will be able to ask the courts for their legal costs, but some banks have sought to transfer legal fees on top of mortgage holders' outstanding arrears and missed mortgage payments.

The Irish Independent has learnt that an attempt by a bank to add the costs of a repossession action on to the borrower's arrears was recently rejected by the High Court.

Paul Joyce of the Free Legal Advice Centres (FLAC) said that homeowners facing court proceedings should not be saddled with legal costs.

"If these cases are struck out, that cost should not fall on already overstretched borrowers," said Mr Joyce.

Nearly one in eight mortgages is currently in arrears, with two-thirds of those in arrears in employment.

Irish Independent

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