Bank of Ireland v Hade

12/05/2023 14:32:00

The Conveyancing Committee wishes to bring two matters to practitioners’ attention concerning the acquisition of properties from receivers and charge holders.

Practitioners are reminded that different procedures apply where a property is to be acquired from a receiver and from a charge holder.

The Land and Conveyancing Law Reform Act 2009 regulates the enforcement of charges entered into after 1 December 2009, and while the previously applicable law is similar in many respects, this note addresses charges executed after that date.

The first matter concerns where a receiver is selling property, and the second concerns sales by charge holders, but each relates to the operation of Section 97 and Section 100 of the 2009 Act.

  1. A High Court judgement was delivered on 25 November 2022 [1] concerning the appointment of a receiver and enforcement of security over a number of properties.

    The Court held that while the charge holder was entitled to appoint a receiver over certain properties, court orders for possession and sale of those properties should have been obtained by the receiver before concluding sales, citing Section 97 and Section 100 of the 2009 Act respectively.

    The Conveyancing Committee understands that this decision is under appeal, and that while the Land Registry is considering the impact of the judgement, it has withheld completion of registration in some receiver sale cases.

    Until an appeal is determined, the Conveyancing Committee recommends that practitioners acting in the sale of a property by a receiver should consider carefully before entering into a contract whether Sections 97 and 100 of the 2009 Act have application, and whether necessary court orders should be obtained.

  2. Sales by the registered owner of a charge require a court order or borrower consent under Section 100 of the 2009 Act, unless that Section has been properly disapplied in the relevant charge. This is permitted where the charge is not a “housing loan mortgage” as defined by the 2009 Act, which in turn requires an analysis of whether the charge secures a “housing loan”.

    The Conveyancing Committee’s attention has been brought to a Land Registry practice which suggests that in applying for registration of a transfer from a charge holder, where the registered owner is not a body corporate, the applicant should lodge evidence of the court order or consent required under Section 100, or evidence that the charge is not a “housing loan mortgage”.

    The Land Registry in turn suggests that a solicitor’s certificate be provided to the effect that the charge is not a housing loan mortgage” and that the registered owner did not act as a “consumer” within the meaning of Consumer Credit legislation at the relevant time.

    The Conveyancing Committee recommends that practitioners should not provide such a certificate, and that such a certificate should only be provided by a person authorised to do so on behalf of the charge holder, or by way of a certificate contained in the relevant deed of assurance. Whether a borrower acted as a “consumer” or whether the underlying loan was a “housing loan mortgage” is likely to be beyond the knowledge of a solicitor representing the vendor/charge holder, and certainly will be beyond the knowledge of a solicitor acting for a purchaser.

[1] Bank of Ireland Mortgage Bank v Niall Hade and Joyce Hade (2014/1416S) and Niall Hade v Bank of Ireland Mortgage Bank and Michael McAteer (2014/4328P).