This is a Seanad Bill which has been amended by the Dáil. In accordance with Standing Order 103, it is deemed to have passed its First, Second and Third Stages in the Seanad and is placed on the Order Paper for Report Stage. On the question "That the Bill be received for final consideration", the Minister may explain the purpose of the amendments made by the Dáil. This is looked upon as the report of the Dáil amendments to the Seanad. For Senators' convenience, I have arranged for the printing and circulation of the amendments. The Minister will deal separately with the subject matter of each related group of amendments. I have also circulated the proposed groupings of the subject matter of amendments. A Senator may contribute once on each grouping. I remind Senators that the only matters that may be discussed are the amendments made by the Dáil and the amendments in the grouping. Group 1 deals with ground rents, the subject matter of amendments Nos. 1 to 5, inclusive, 51 and 52. I call the Minister to explain the amendments.
Registration of Deeds and Title Bill 2004 [Seanad Bill amended by the Dáil]: Report and Final Stages.
This group of amendments is related to the insertion of two new sections relating to ground rents in the Bill. They are amendments Nos. 51 and 52. The purpose of these new sections is to deal with problems that have arisen under current ground rents legislation.
By way of background, I should tell the House that section 8 of the Landlord and Tenant (Ground Rents)(No. 2) Act of 1978 contains the general right to acquire the fee simple. Section 9 provides that this general right to acquire the fee simple applies to a person holding the land under a lease provided that the conditions set out in that section, section 9, and one of seven alternative conditions in section 10 is met. The seven alternative conditions in section 10 cover a broad range of situations. Section 16 of the 1978 (No. 2) Act, on the other hand, contains various specific restrictions where the right to acquire the fee simple does not apply.
Amendment No. 51 will add a new category to the restricted list in section 16. It will prohibit the acquisition of the fee simple, that is, the purchase of the ground rent, in a case of the sub-lease of land granted by a lessee who is not eligible to acquire the fee simple. In other words, if someone holds land under a long lease and is not entitled to acquire the fee simple, he or she cannot, simply by creating a dummy company and giving it a lease of the land on conditions that do comply with the Act, effectively give to the dummy company the right to do something he or she cannot do. This will ensure that an eligible sub-lease cannot in future be carved out of a non-eligible lease in a manner that was neither intended nor foreseen by the 1978 (No. 2) Act.
One exception is being allowed and that arises in the case where the only reason a lessee is not eligible to acquire the fee simple is that a covenant entered into by that lessee to erect permanent buildings on the land has not been substantially complied with on the date on which the sub-lease is granted but the covenant is substantially complied with by the sub-lessee after that date. This exception to the general prohibition has been recommended by the Law Reform Commission.
Amendment No. 52 amends section 28 of the same Act. It also stems from a recommendation of the Law Reform Commission. The commission has identified an anomaly within existing law where, on acquisition of the fee simple, not only covenants within the lease under which the land was held, say, for certain specified covenants, but also collateral covenants are extinguished. The new text of subsection (1) contained in this amendment makes it clear that only covenants in the lease under which the person held the land, save for the specified covenants, will be extinguished on the acquisition of the fee simple. It also provides that new covenants may be entered into with the agreement of the person acquiring the fee simple. Both of these amendments take effect from 27 February last, that is, the date on which I circulated the text of the amendments and issued a press release indicating my intention to deal with the problem that has arisen. This backdating was vital because if I had signalled that I intended to halt people's right to create sub-leases, get around the groundsman's legislation and not specify a date from which this new closing off of the loophole would operate, people would have rushed to their solicitors in the last few weeks to create all these leases.
Any time lag in giving effect to them would have afforded an opportunity to those who could profit from these weaknesses in the current legislation to take advantage of them prior to the enactment of this legislation. As these new sections to the landlord and tenant code relate to it, it has been necessary to amend the Long Title to exclude those sections in the collective citation and commencement provisions of the Bill.
We agree with these amendments because they are sensible and plug the loopholes in the legislation. We agree that backdating is necessary.
Group 2 consists of amendments Nos. 6 to 13, inclusive; Nos. 16 to 19, inclusive; Nos. 21 to 24, inclusive; Nos. 26 to 29, inclusive; Nos. 32 to 34, inclusive; Nos. 43, 45, 46, 47 and 48; and Nos. 54 to 57, inclusive. I call on the Minister to explain the amendments.
These amendments are drafting and technical amendments which should not bother the House.
Group 3 deals with membership of the property registration authority, the subject matter of amendments Nos. 14 and 15. I call on the Minister to explain the amendments.
These two amendments relate to section 11 of the Bill, which deals with membership of the authority. During discussions in the Dáil, I accepted a proposal to delete the subsection which provided that a member of the authority could only serve two terms of office. The argument that this could lead to the loss of expertise in the authority was well made and I had no difficulty in accepting this proposal.
I proposed an amendment to subsection (13) — now subsection (12) — which sets out the grounds under which a person ceases to be a member of the authority. The amendment introduces two new grounds, namely, conviction of an offence involving fraud or dishonesty and disqualification from being a director of a company.
We agree with these amendments. The Minister took on board a number of sensible suggestions made in the other House, for which I applaud him.
I agree with the sentiments expressed by Senator Cummins. The Minister's actions in this regard are very sensible because an element of flexibility is required in respect of membership of the authority. The authority could contain some very capable members, which one would like to retain, as well as some dead wood. Flexibility is needed in this regard. However, I wonder whether it will be possible to find someone who is prepared to put in six or more years of service.
We will see.
Group 4 deals with the Comptroller and Auditor General (Amendment) Act 1993, the subject matter of amendment No. 20. I call on the Minister to explain the amendment.
This amendment inserts a new section into the Bill which relates to the Comptroller and Auditor General (Amendment) Act 1993. The purpose of the amendment is to ensure that the 1993 Act applies to the property registration authority as if it were a Department. The need arises because the authority will have its own Vote, as the Land Registry and registry of deeds currently have. The chief executive will be the Accounting Officer under section 23 of the Bill. A similar provision was inserted into the Garda Síochána Act to come into effect when the Garda Commissioner becomes the Accounting Officer.
Group 5 deals with terms of leases, the subject matter of amendments Nos. 25, 31, 38, 39 and 49. I call on the Minister to explain the amendments.
The Registration of Title Act 1964 provides for the registration of ownership of both freehold land and leasehold interests. Leasehold interest is defined as an interest in land under a lease for a term of which more than 21 years are unexpired at the date of registration. It would be desirable to move towards a situation where leases of less than 21 years could also be registered. It is for this reason that I propose to introduce the possibility of changing the 21-year period in the definition of deed in section 31 and the definition of leasehold interest in section 49. In both cases, I am proposing that the registration of deeds and title rules committee be allowed to prescribe a different period.
I am also proposing an amendment to section 62 — amendment No. 49 — in order to add a new subsection which will guide the rules committee in its deliberation on this issue because we must lay down some guidelines to help the committee decide these kinds of issues to ensure we are acting constitutionally. It provides that in determining whether the period should be altered and by how much, the rules committee shall have regard to the authority's function to promote and extend registration of ownership of land and the resources available to the authority for performing this function. These changes trigger consequential changes in sections 69 and 72 of the 1964 Act and are covered by amendments Nos. 38 and 39.
Does the Minister have a period in mind in respect of asking the rules committee to prescribe another period?
I am informed that England and Wales have moved towards a period of seven years. However, this may be a long-term objective. This issue concerns resources and practicality. There is, as the new set of amendments provide, an imperative on the committee to examine the resources available to the authority and to look to the broader interest of encouraging registration. It would make no sense to clutter up title with shorter leases of two or three years. Such an arrangement would make life very complicated. We might reach a point in the future where all this can be handled electronically. The committee will progress by degrees towards the kind of figures achieved in the UK.
Group 6 deals with the transfer of land, the subject matter of amendment No. 30. I call on the Minister to explain the amendment.
On Committee Stage in the other House, I accepted the principle of an amendment designed to ensure that the provisions of section 38 of the Bill concerning the validity of certain registered deeds did not affect proceedings which were pending at the commencement of the section. Amendment No. 30 gives effect to the intention behind the original amendment, which I accepted.
Group 7 deals with qualified title, the subject matter of amendments Nos. 35 and 36. I call on the Minister to explain the amendments.
One of the primary functions of the new authority will be to promote and extend the registration of ownership of land. My Department has engaged in extensive consultations with the Land Registry, the Law Society and the Irish Mortgage Council on practical means of achieving this objective. One of the suggestions that arose from these discussions related to the categories of title which may be applied for under the Registration of Title Act 1964. Under the 1964 Act, the categories of title which may be registered are as follows: in respect of freehold land, an absolute title, a qualified title or possessory title; and in respect of leasehold interest, an absolute title, a good leasehold title, a qualified title or a possessory title.
In cases where the application for an absolute or good leasehold title is submitted but the title can be established only for a limited period or with certain reservations, the 1964 Act allows the registrar to grant a qualified title. However, the Act did not concurrently permit applications for qualified title. In respect of the status of qualified title, section 39 of the 1964 Act, which relates to freehold, and section 47 of the 1964 Act, which relates to leasehold, provide that a registration of an owner with a qualified title shall have the same effect as registration with an absolute title, except that registration with a qualified title does not affect or prejudice the enforcement of any right appearing by the register to be accepted.
Arising from discussions with the relevant bodies, I have introduced amendments to the 1964 Act to permit applications for qualified title with a view to removing the stigma currently associated with qualified status. In effect, an applicant would be free to apply for registration of a title, subject to certain reservations which will be recorded on the relevant folio in the Land Registry. The entry on the register will accept from registration any right arising before a specified date, under a specified instrument or otherwise particularly described in the register. Someone with an imperfect title will be able to apply to register it knowing of the imperfection, which will be recorded. I should not use the term "imperfection", rather "area of uncertainty" or whatever.
This change will apply to both sections 33 and 40 of the 1964 Act, which deal with freehold land and leasehold interests, respectively. While these changes are relatively modest in scope, in the interests of clarity I have decided to replace section 33 by amendment No. 35 and section 40 by amendment No. 36 so that practitioners will be able to see the exact meaning of the two sections without needing to take out notebooks to make their own insertions and amendments.
I agree to these amendments. From a practitioner's point of view, it is important that these issues are clarified. The matter of qualified status has been discussed for a long time. While the amendments are modest, they will be important for all practitioners in this area.
Group 8 deals with the Registration of Title Act 1964, the subject matter of amendments Nos. 37, 40, 41, 42 and 44. I call the Minister to explain the amendments.
This group comprises a number of amendments to the 1964 Act that are designed to improve registration procedures and, therefore, assist the new authority in promoting and extending the registration of title. Amendment No. 37 introduces a new subsection to section 51 of the 1964 Act to make it easier to register long-term leases in registered freehold properties. In the case of a registered freehold property, any lease of the property or parts of it is deemed under current law to confer an unregistered leasehold interest. Before such an interest can be registered, it is necessary for the lessee to apply for what is called first registration.
Having examined the issue, the current law should be amended to provide that a leasehold folio can be opened without the need for an application for first registration of such cases. This can be done by means of the amendment to section 51, which provides that the word "transfer" shall include a lease, which will go far in simplifying the registration of units, in particular in multiunit apartment blocks which have become more popular in recent years.
Amendment No. 40 involves the substitution of a new text for section 90 of the 1964 Act, which deals with the powers of a person entitled to be registered as first owner of a land or charge. Where such a person wishes to transfer the land or charge before he or she is registered as owner, he or she may do so subject to any rights affecting his or her interest. However, a person who is entitled to be registered as owner, having obtained ownership by way of a lease, is not entitled to deal with the property in the same manner as a person who is entitled under a transfer.
This is not appropriate in modern conditions and, therefore, I am amending the section to allow for this measure. In reviewing the section, it also became clear to me that the wording in the 1964 Act was open to a number of interpretations. In order to remedy the situation, we substituted a revised text of the section for the benefit of interested parties, particularly practitioners.
Amendment No. 41 substitutes a new wording for section 104 of the 1964 Act. The Land Registry identified section 104, which relates to stamp duty, as a section that causes difficulties for it in its day-to-day operations. My Department has discussed the operation of section 104 with the Land Registry and the Revenue Commissioners and an agreement has been reached on the revised wording of the section, which is the subject of this amendment. In future, the Land Registry will not proceed with a registration where it has reasonable grounds for suspecting that the correct amount of stamp duty has not been paid.
Amendment No. 42 substitutes a new wording for section 108 of the 1964 Act. Currently, that section allows the registrar to make an entry in the register granting priority to an intending purchaser or lender where a solicitor certifies that the applicant has entered into a contract to purchase all or part of a registered portfolio or has contracted to lend money on the security of a charge on the property. The effect is to inhibit all dealings on the folio for a period of 14 days. While it is possible to apply for further inhibitions on the expiration of the 14-day period, the Land Registry considers the time limit in this section is too inflexible. Therefore, we are increasing the 14-day inhibition period to 21 days.
I am also aware that business and conveyancing practices are changing and I am anxious to introduce some flexibility into the arrangements. Accordingly, I have made provision that the time period may be changed by means of general rules without reverting to the Oireachtas. This will allow the rules committee, with the consent of the Minister, to extend the period to 21 days to accord with existing conveyancing practice. Amendment No. 44 updates the penalties for offences under section 119 of the 1964 Act by bringing them into line with the penalties set out in section 40 of this Bill in respect of the registry of deeds.
There are a number of amendments in this group. As the Minister outlined, they are mainly technical and complex but simplify the situation and adapt the legislation to modern practice. We agree with the amendments.
Group 9 deals with abolishing land certificates and certificates of charge, the subject matter of amendment No. 50. I ask the Minister to explain the amendment.
This is an important amendment to the Bill. It responds to concerns expressed in earlier debates about the delays and costs currently associated with the registration of land. Under current legislation, if a registered owner of land wishes to deal with it in any way, a land certificate issued in respect of the land must be presented to the Land Registry before further transactions can be registered. Similarly, the legislation requires that the Land Registry issue a certificate of charge on the mortgage of registered land and that this certificate be produced in respect of any further dealings.
From meetings we held with the parties involved, including the Land Registry, the Law Society and the Irish Mortgage Council, a consensus has emerged of a radical kind, namely, that the land certificate and certificate of charge system is completely incompatible with the introduction of e-conveyancing, which is a product the Government is trying to advance. The Department and I became convinced that such a system cannot continue if we wish to progress to a fully electronic conveyancing system with all of the benefits e-conveyancing would bring to practitioners and consumers.
The main reason current legislation requires the submission of any existing land certificate is that it could have been lodged with a financial institution as security for a loan by way of an equitable deposit, which is generally referred to as an equitable mortgage. While such informal mortgages have become less common, the fact that any outstanding land certificates must be presented before any new transaction in respect of the property can be registered gives rise to a significant administrative burden for the Land Registry. Moreover, the predictable loss and misplacement of certificates, which may have issued many years ago and often decades previously, cause long delays and add to the costs of conveyancing.
The new section provides for the phasing out of land certificates over a three-year period. Specifically, it provides that land certificates and certificates of charge issued before the commencement of subsection (1) and not already cancelled will cease to have any force or effect three years after the commencement of subsection (2). If someone has loaned in a private transaction or as a lending institution on foot of a deposit or arrangement whereby he or she held onto the land certificate, he or she will effectively have three years to do something with his or her interest in the land. Otherwise, it will cease to have any significance by the end of that time. In addition, we have provided that section 105 of the 1964 Act, which requires the production of a land certificate or certificate of charge on the lodgment of a dealing in the Land Registry, shall cease to operate three years after the commencement of subsection (2).
I am making provision for the conversion of any outstanding equitable mortgages into legal charges during that three-year period. Subsection (3) contains details of this conversion process and also requires the new authority to publish the new provisions and provide information on their implications for holders of land certificates or certificates of charge. This will not be done by stealth — it will be publicly advertised so no one can say later that he or she never heard about it and had been relying on keeping someone else's land certificate under the pillow as security for a loan or whatever.
Despite the provision that adequate notice be given of these changes, it is possible that some people may not become aware of them or their implications and could suffer financial losses as a result. This might arise by reason of a person suffering from a disability. For example, if someone received one of these certificates but developed Alzheimer's disease or something similar, he or she might be prejudiced and could not grasp the significance of a newspaper advertisement.
In practice, this is unlikely to arise, except possibly in the case of a private transaction between individuals, as presumably the banks will not develop Alzheimer's disease. For this reason, I have made provision in subsections (4) to (8) for a compensation mechanism. In the event of it being used, the holder of a land certificate or certificate of charge could apply to the court for compensation for the claimed financial loss. Under the stringent conditions set out in subsection (5), the court could declare that the holder was entitled to compensation and determine the amount. That provision was included in an abundance of caution, in case someone's property rights, particularly those of a vulnerable person, could be extinguished without their knowledge and to their prejudice.
I readily acknowledge that these changes are far-reaching and radical. However, as we move towards e-conveyancing, the idea of producing 30 year old pieces of paper which may have been in deed boxes, under beds, in solicitors' offices, in bank safes or whatever before one can do anything in respect of land is simply not compatible with an electronic system. Hence, although this change is radical, it is justified and necessary if we are to move to the e-conveyancing of land.
The safeguards for vulnerable people are absolutely necessary and the move towards e-conveyancing is undoubtedly important and ground-breaking. It moves our system closer to those operated by our European neighbours, where the process of buying a house is much simpler and faster. We wish to reach such a position here, particularly in this age of increased technology and instant monetary transfers. Hence, the aim is to simplify matters and to make them quicker and easier. However, as the Minister noted, it is important to include these safeguards as we proceed towards e-conveyancing.
I fully agree and if one takes the e-conveyancing route, one must dispense with the paper trail completely. While I am unsure whether there is any set of circumstances in which paper would return to the network, I believe it should not. If it does so, the entire electronic element of the process would be rendered meaningless.
The House will now proceed to group 10, which relates to the amendment of the Ombudsman Acts, the subject matter of amendment No. 53.
Briefly, this amendment is designed to ensure that the authority is subject both to the Ombudsman Act 1980 and the Ombudsman for Children Act 2002 in the same way as the Land Registry and registry of deeds, which are already included in the Schedules to both Acts.
I wish to take this opportunity to thank the Cathaoirleach and the Members of both Houses for the constructive approach shown with regard to this Bill. Last year when it was introduced to this House, I stated that the reforms contained in the Bill would help to make the conveyancing of land easier and faster and would reduce registration delays and associated costs. The additional reforms introduced by means of amendments during its passage through both Houses will also contribute significantly to the process of modernisation of our property registration system. This modernisation will in turn contribute to an improved domestic business environment and will improve our international ranking as a location in which to do business.
The new property registration authority will have the function of controlling and managing both of our existing registries, the Land Registry and the registry of deeds, as well as promoting the extending of registration of ownership of land. The extending of registration of ownership of land is a key objective as we move towards electronic conveyancing of land.
I have already extended compulsory registration to three further counties, namely, counties Longford, Roscommon and Westmeath, with effect from 1 April. However, further rapid progress is essential and I will ask the new authority to give particular attention to the further extension of compulsory registration in its first strategic plan.
When I introduced the Bill, I also referred to the urgent need to update and streamline our land and conveyancing laws. I mentioned the joint modernisation project which my Department has undertaken with the Law Reform Commission. In that context, the text of a land and conveyancing Bill is close to being finalised for publication and I intend to have it presented to this House in the current session. The new Bill will simplify and streamline land and conveyancing law, with a view to making it more easily comprehensible for legal practitioners and the public alike, updating it in order to accommodate changing social, economic and demographic needs, including new forms of property ownership, and making the conveyancing of land easier and faster.
I look forward to introducing the new Bill in this House because it will sweep away many centuries of accretion of law, going back in some cases to the 13th century. Hence, this will be a quite radical and reforming Bill. More than 150 pre-1922 statutes will be swept away and replaced with provisions which are more suitable to the 21st century. Some of the statutes are almost as old as the arrival of the Normans, which shows something.
That tells us something.
In any event, until I introduce the Second Stage debate of the new Bill in this House, I wish to thank all the Members of this House who assiduously contributed to the passage of the present Bill through both Houses. I also wish, unprompted, to pay tribute to the officials in my Department who have worked on both projects and who are engaged in bringing about real, genuine and radical change in a manner in which the media probably are hardly interested. However, it is for Ireland's betterment.
I compliment the Minister on introducing this long overdue legislation. I also compliment the officials involved on the great amount of work that has gone into this extremely technical and complex Bill. While I was about to express the hope that it would be the first in a series of Bills to bring our law to the point at which it should be with regard to this area, I was glad to hear the Minister state that a new Bill will be introduced in the not too distant future which will deal with land law and conveyancing law. This is most welcome as all parties, as well as the practitioners, have been crying out for such legislation. The promised legislation will bring us up to date in respect of the entire area of land law, which is badly needed. I again compliment the Minister on bringing forward this legislation and I thank his officials.
I thank the Minister and his officials for this welcome and reforming legislation. It is clear that we need effective and efficient legislation to deal with modern Ireland. Undoubtedly, it is also true that this kind of legislation has the capacity to contribute in a meaningful manner to economic activity.
Recently, I heard the Minister refer, possibly on "Questions and Answers", to the amount of archaic and ancient legislation that has been sitting on the Statute Book since Norman times or at some other point. The Minister has played his part in reforming the entire system and will continue to so do. It is ridiculous to think that we still suffer the laws and legislation of people who enacted them while wearing plus fours or carrying swords. However, that is another day's debate.
In addition to reforming the legislation, it is also essential that it be simplified, in order that those who must deal with it in whatever capacity can understand it better. Again, I thank the Minister and his officials.
When is it proposed to sit again?
At 12 noon on Wednesday, 3 May 2006.