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. Senators may speak only once on each group. The only matters, therefore, which may be discussed are the amendments made by the Dáil.
Land and Conveyancing Law Reform Bill 2008 [Seanad Bill amended by the Dáil]: Report and Final Stages.
I welcome the presence of Ms Justice Catherine McGuinness and other members of the Law Reform Commission whom I thank for the work they carried out in the preparation of this Bill. I also thank the commission's staff.
The principal amendment in Part 1 is amendment No. 12, which provides in the new text of section 5(3) for the making of regulations during a five-year period following commencement to remove any difficulty encountered in bringing a provision of the Act into effect. This may be done only on condition, first, that any modification is in conformity with the purposes, principles and spirit of the Act and, second, that a draft of any such regulations shall be laid before both Houses of the Oireachtas and shall not be made until a resolution approving of the draft has been passed by each House.
The purpose of the amendments to Part 2, amendments Nos. 14 to 22, inclusive, is to improve the presentation and clarify the meaning of the relevant provisions.
Section 21 provides for the "over-reaching" of equitable interests in land, for example, where a person is part-owner by virtue of having contributed to the purchase or renovation of a house but is not registered as legal owner, in order that the purchaser obtains clean title. Arising from the discussions that have taken place, there were concerns that section 21 may go too far in over-reaching the equitable interests of a person who is in actual occupation of the land. While subsection (4) provides for registration of an equitable interest in the Land Registry or Registry of Deeds, thereby preventing any over-reaching of that interest, section 72 of the Registration of Title Act 1964 provides that actual occupation is a burden affecting the land regardless of whether it is registered. It is intended, therefore, to retain the provision in section 72 of the 1964 Act. This will mean that the equitable interest of a person in actual occupation will not be over-reached even if that interest has not been registered in the Land Registry or the Registry of Deeds. The existing practice whereby an intending purchaser must make inquiries as to who is in actual occupation of the land or to whom rent is paid will therefore be retained. Amendments Nos. 23 and 25, together with Amendment No. 141, achieve the desired result.
The amendments to Part 8, which deals with contracts and conveyances, relate to the root of title, formalities for deeds and words of limitation. The Bill as passed by the Seanad reduces the period in respect of which a purchaser may require proof of the root of title under the Vendor and Purchaser Act 1874 from 40 years to 20 years. The purpose of amendments Nos. 44, 45 and 46, which have the agreement of the Law Society, is to reduce that root of title period further to 15 years. These changes will help to simplify further and streamline conveyancing formalities. The amendments to the provisions on formalities for deeds are intended to clarify those provisions.
Amendments Nos. 47 and 49 provide that a deed executed under section 62 has effect as if it were a document executed under seal.
Section 65 will abolish words of limitation in the case of unregistered land. This is already the case for registered land under section 123 of the Registration of Title Act 1964. Amendment No. 50 makes it clear that a conveyance of unregistered land, with or without words of limitation, passes the grantor's entire estate or interest unless a contrary intention is apparent in the conveyance.
Amendments Nos. 51 and 52 arise from comments made by the conveyancing committee of the Law Society. The purpose of the amendments is to hive off subsections (5) to (7) of section 65 into a separate new section and to clarify and improve the presentation.
Regarding Part 11, the main amendment of substance is amendment No. 98. This is a technical amendment which proposes to remedy a shortcoming which has come to light in section 25 of the Registration of Title Act 1964.
The amendments to Schedule 1 provide for the amendment of the Courts (Supplemental Provisions) Act 1961 and further amendments to the Registration of Title Act 1964 and the Registration of Deeds and Title Act 2006.
The bulk of the amendments to Schedule 2 take account of provisions in the Statute Law Revision Act 2007, including the discovery of more obsolete statutes which can now be repealed.
I have no objections to these amendments. In fact, I have no objections to the Bill which is an extraordinary piece of work. Anyone who has studied law or has had any dealings with property will know the complications of this area. The Bill is a monumental piece of work when one sees the list of statutes which are either being amended or repealed. The scope of the work is quite extraordinary. One can gather that from the manner in which it is drafted. Given that there have been quite a number but not so extensive a number of amendments in the Dáil, I hesitate to delve into them now as it might only complicate this very technical area. This good Bill has been well drafted. I congratulate the Law Reform Commission on the extraordinary work it has done in preparing the ground for the Bill before us. Although I wanted to make those general remarks, I have no objections to these amendments.
This is legislation we cannot be accused of guillotining and rushing through the House. It was initiated in the Seanad on 7 June 2006 when I was a Member of the Lower House, so it has taken a long time. I know the Leas-Chathaoirleach was deeply involved in the legislation at that stage. I concur with my colleague, Senator Regan, that it is excellent legislation.
I compliment the Law Reform Commission on its excellent work not only in this area but in many other areas as well. I always study the reports of the commission whose staff must be congratulated on their consistency in dealing with complex matters. Sometimes the Oireachtas can be accused of not reacting quickly enough to some of the commission's recommendations. By and large, however, they are well appreciated by Members of the Oireachtas, including members of the Government.
This great legislation is both reformative and informative. I congratulate the Minister on eventually bringing the Bill to its rightful conclusion. For a change, three years plus for legislation going through the Oireachtas is a counterbalance to the accusations we sometimes hear that we are rushing measures through the House by guillotining debate. This Bill has had a lengthy debate in both Houses and in Committee. I commend the Bill and thank the Minister and his officials for the excellent work that went into drafting it.
We have spoken on the amendments in Group 1 and Members seem to have replied to the entire Bill. Does the Minister wish to comment on Groups 2 to 6, inclusive?
Yes. The second group of amendments, Nos. 28 and 29, insert a new Part 5 which makes specific statutory provision for the first time in Irish law for the variation of trusts. The enactment of such a provision was recommended by the Law Reform Commission in two reports entitled The Rule against Perpetuities and Cognate Rules, and The Variation of Trusts. In both reports, the commission recommended that the abolition of the rules in question, which are being repealed in section 16, be accompanied by the enactment of statutory provisions to permit the variation of trusts. That is the purpose of this new Part.
Does Senator Regan wish to comment on Group 2?
Generally speaking, I have no issues with it but I have one observation to make on one of the sections.
I will let the Minister deal with Groups 3 to 6, inclusive, before calling on Senator Regan to contribute.
The third group of amendments relates to Part 7 of the Bill dealing with appurtenant rights, that is, rights that permit one landowner to do something on a neighbour's land, or entitle that landowner to prevent the neighbour from doing something on that neighbour's land.
The amendments to section 33 arise from discussions on the acquisition of easements by means of the doctrine of lost modern grant. Following a review of the relevant provisions, an element of flexibility currently available under lost modern grant is re-introduced.
The proposed new subsection (3) to be inserted in section 33 by amendment No. 33 provides that where the relevant user period was not immediately before the commencement of the action to establish the existence of the easement, the court may none the less make an order declaring the existence of the easement if it is satisfied that it is just and equitable in all circumstances of the case. This will permit the court to have regard to factors such as long use of the easement, even if that use has been discontinued prior to commencement of the action. The purpose of amendment No. 34 is to clarify the provision relating to incapacity.
Amendment No. 38 makes it clear that the adjoining owner may apply to the court for an order requiring that any damage be made good if the building owner fails to do so within a reasonable time. Alternatively, if the building owner fails to reimburse the costs and expenses of doing so within a reasonable period, the adjoining owner may recover the costs and expenses as a simple contract debt. This provision received some discussion in the Dáil.
Amendments Nos. 39 and 40 substitute revised text for sections 46 and 47, which deal with the enforceability of freehold covenants. Amendment No. 41 makes it clear that a person may apply for a court order in respect of freehold covenants which were entered into before, as well as after, the commencement of the legislation. The purpose of the new section 42(4), to be inserted by amendment No. 43, is to provide that any orders made by the court under this section to discharge or modify a freehold covenant are registered in the Land Registry or Registry of Deeds, as appropriate. This will ensure that any intending purchasers of the land will be aware of changes made under such an order to covenants affecting the land.
The fourth group of amendments relates to Part 9, dealing with mortgages, and Part 10, dealing with judgment mortgages. The effect of the changes to section 86(2) in amendment No. 59 is that any attempt to mortgage land by any method other than a charge by deed shall not create a legal mortgage. The advantage of this approach is that it will greatly simplify the law by requiring a charge by deed for all legal mortgages of land. An exception to this rule is made in the new section 86(3) for transactions under a statutory provision.
Amendment No. 62 provides a new text for section 89 which deals with restrictions on consolidation. Regarding amendment No. 63, concerns were expressed to my Department that the original scope of section 91 was too broad and might have unintended consequences. The intention behind this section is to put into statutory form the right of a borrower, not a lender, who may be facing financial difficulty to seek a court order to sell the mortgaged property to reduce his debts or to prevent them from mounting further. The text has been redrafted to make this clearer. In addition, a new section 89(4) has been added which will mean that except in the case of a housing loan mortgage, this section will take effect subject to the mortgage. These changes address the concerns which had been raised about the original text of this section.
The purpose of the amendments to Chapter 3 is to strengthen protection for borrowers with a housing loan mortgage. Under current law, the rights of borrowers are subject to the express terms of the mortgage. If a mortgage deed contains express provisions with enhanced powers for the lending institution, protection for the borrower is reduced and the impact of statutory protections is weakened.
The revised text of the section on powers and rights generally, as amended by amendment No. 64, makes it clear that the statutory powers and rights of lending institutions set out in Chapter 3 of Part 9 will apply in full to housing loan mortgages, irrespective of any other powers and rights included in the mortgage by the lending institution. In other cases, such as commercial developments where very large sums may be involved, it will remain possible to include express provisions which override the statutory provisions. It is usual in such cases to have professional support and advisers to ensure that the mortgage deed fully reflects the intentions of the parties. Amendment No. 67, which deletes subsections (3) to (6) of section 94, and amendments Nos. 72 and 73, which replace the text of section 97 and insert a new section 98, respectively, contain related changes.
The most significant change here is the new provision in amendment No. 72, which provides that the power of sale will in future be subject to obtaining a court order. It is a rather curious anomaly of current law that a court order is required to obtain possession of property with a view to selling it, but the power to sell can be exercised without such an order. In practice, a lending institution will find it very difficult to sell residential dwellings without vacant possession and this means that a court order for possession is generally sought in advance of sale. I am also including a provision in section 97 requiring that consent be given within the seven day period prior to the taking of possession or within the seven day period prior to exercise of the power of sale, as the case may be.
Amendment No. 67 deletes subsections (3) to (6) of section 94, which give the court a wide margin of discretion to adjourn proceedings where a lending institution is seeking an order for possession of mortgaged property. These subsections reappear in the new section 98. In that section, the scope of these subsections is extended to cases in which the lending institution is seeking an order for the sale of the property. The new section 98 gives the courts discretion to adjourn proceedings, or to attach conditions to any order it may make, where an order for possession is sought under section 94 or an order for sale under section 97.
I have been concerned for some time that certain lending institutions appear to be commencing proceedings for the repossession of dwellings on a routine basis in the High Court rather than the Circuit Court, and that this is deterring the borrowers in question from defending the proceedings and benefiting from the margin of discretion which the courts have in such proceedings. I have particular experience from my constituency about this. This practice has been condemned by the Master of the High Court. Before he said anything in public, I had asked my officials to look at this issue as I am aware of a number of cases involving people who should not have been given a loan and were refused by the main banks, but who went to what are known as sub-prime lenders. The sub-prime lenders gave them the money and the people ultimately defaulted on their payment for relatively small amounts of money, and ended up with a High Court summons. That is grossly unfair, so I asked my officials to bring in an amendment making it a requirement that proceedings for repossession by lending institutions have to be commenced in the Circuit Court, rather than in either court. Several High Court judges also expressed their dismay in cases where borrowers do not make an appearance and enter a defence.
People from outside Dublin are reluctant not to respond to a High Court summons. Bringing them before the Circuit Court is a bit closer to home and might cause some embarrassment to them, but to be fair to the media and to the county registrars and the judges who operate this in the Circuit Court, there is an understanding that these are difficult cases and little publicity is given to them. I urge that this continue.
In future, it will be obligatory for lending institutions to commence repossession proceedings in the case of housing loan mortgages in the Circuit Court rather than the High Court. Proceedings for repossession other than those relating to housing loan mortgages may continue to be taken ab initio in the High Court. This change will encourage borrowers who are experiencing genuine difficulties in keeping up with their mortgage repayments to enter an appearance and benefit from the margin of discretion and flexibility which the courts exercise in this area. The purpose of all these amendments is to strengthen consumer protection.
The existing text section 104(1), dealing with the appointment of a receiver, refers back to provisions in section 97(1) and this has caused some confusion. Amendment No. 78 drops the cross-reference to section 97. Amendment No. 84 rearranges the contents of subsections (1) and (2) of section 110 to clarify their meaning.
Part 10 of the Bill, dealing with judgment mortgages, replaces with substantial modification the provisions of the Judgment Mortgage (Ireland) Acts 1850 and 1858. Senator Norris spoke yesterday about the Enforcement of Court Orders Bill. I gave an example where I registered a judgment mortgage when I was in practice, and he was delighted with the interesting aspect of that. A creditor who has obtained a judgment against another person will have to apply to the Property Registration Authority to register a judgment mortgage against that person's estate or interest in land.
It is intended to drop section 112 which had provided for an update of section 4 of the 1850 Act. On further reflection, this provision is no longer required and the 1850 Act is repealed in its entirety in Schedule 2. To avoid any misunderstanding, the revised text of section 113(1), inserted by amendment No. 88, makes it clear that a creditor who has obtained a judgment against another person has to apply to the Property Registration Authority to register a judgment mortgage against that person’s estate or interest in land. The existing wording could be misinterpreted to mean that the registration could be affected without application to the authority. Amendment No. 89, which replaces the existing text of section 114, incorporates a cross-reference to section 29 of the Bill into section 114(1) of the Bill. This will alert a judgment mortgagee to the fact that the application must be made under section 29 rather than section 114 in the case of co-owned land.
The fifth group of amendments inserts a new part into the Bill to make provision for the registration of a lis pendens. It updates and streamlines several provisions which are contained in statutes dating back to the 19th century and facilitates the repeal of those provisions. The existing section 121 of the Bill makes provision for the protection of purchasers where registration of a lis pendens has not taken place. It has become apparent since the Bill was published that the general law in this area is confusing and needs to be codified. Codification has an added advantage of facilitating the repeal of various provisions in statutes dating back to 1844, 1867 and 1871. The new section 117 contains the relevant definitions.
Section 118 makes provision for keeping the register, which is already maintained in the central office of the High Court. Under section 118(4), a lis pendens already registered under the 1844 Act and not vacated when this legislation comes into force will continue to have effect as if the 1844 Act had not been repealed. It will be deemed to form part of the register to be maintained under section 118(1). This will avoid the Courts Service having to re-enter it in a new register. Section 119 allows for the cancellation of an entry in the register, while sections 120 and 121 permit the court to vacate an order under certain conditions. Section 122 contains the provision which is currently in section 121.
The sixth group of amendments deals with miscellaneous matters. Senators will be aware of the difficulties being encountered in the retail sector as a result of the current economic circumstances. The practice of including upward-only rent review clauses in commercial leases, which has become commonplace, has not arisen from any legislative requirement. Parties have always been free to agree that more neutral review clauses should be included in their leases. Even where upward-only review clauses are provided for, the parties can agree that a flexible approach should be taken to the amount of rent payable and the way it should be paid. The advice of the Office of the Attorney General suggests it would be problematic, if not impossible, to interfere in a wholesale way with existing lease agreements. In consequence, the amendment that was introduced deals with rent review clauses only in the context of future leases. Accordingly, leases entered into prior to the commencement of section 131, or indeed, agreements for such leases, will not be subject to the new regime. By virtue of that regime, future rent review clauses will be subject to the construction that the rent payable on review may be fixed at an amount which is less than, greater than or the same as the amount payable immediately prior to the date on which the rent falls to be reviewed. This applies even if such a clause were to be couched in terms of upward-only movement. Amendment No. 105 to section 122 addresses the concerns raised in the Seanad about the abolition of a sheriff's powers to seize a tenancy. The Irish sheriffs association has expressed concerns about the proposal to abolish the seizure power. These concerns are shared by the Revenue Commissioners. When officials from my Department met representatives of the sheriffs association and the Revenue Commissioners to discuss the situation, it emerged that the seizure power is still used in the case of business tenancies where the objective is not to sell the leasehold itself but to occupy the premises for the purposes of selling the stock. This means they do not have to move the stock to other premises for a salvage sale. Amendment No. 105, therefore, proposes to retain the seizure power in the case of business tenancies.
I thank the Minister for the explanations he has given. I have no difficulty with any aspect of this Bill. I would like to comment on an issue I came across, in a legal context, some time ago. In her 2006 judgment in the case of Irwin v. Deasy, Ms Justice Laffoy said that one of the problems with co-ownership is that if one of the co-owners is in debt, a judgment mortgage cannot be enforced. She identified as a lacuna in the law the fact that in the case of registered land, the courts do not have the jurisdiction to order sale in lieu of partition. This is one example of the kind of intricate problems that can arise in this sector. I understand it is rectified in Part 7 of this Act, which deals with co-ownership.
The first Government of the Free State decided, in its constitution, to continue all existing statutes, whatever their origin. This Bill contains an extraordinary list of old statutes, many of which predate this State, that are being repealed in whole or in part. It is extraordinary that so much of our legislation predates the foundation of the State. It would come as a surprise to many people that the statutes in question are still in existence. As a result of this Bill, law students will be relieved of any requirement to scan the statutes in question. It is noteworthy that the Statute De Donis Conditionalibus 1285 and the Statute Quia Emptores 1290 will be completely gone. It seems that part of the Maintenance and Embracery Act 1634 and the Statute of Frauds 1695 will still be with us, as we are not repealing them in full. We will have to live with some of these older statutes for some time. I compliment the Law Reform Commission and the Department of Justice, Equality and Law Reform on their extraordinary work in drafting this Bill. I do not intend to make any further amendments, suggestions or observations at this stage. I thank the Minister for presenting this excellent legislation, which has been debated at length by both Houses and by the Oireachtas committees, to the House today.
I heard the Minister speak earlier about the issue of sub-prime mortgages. I understand some people in his constituency who could not get loans from the standard mortgage lenders had to seek loans from sub-prime mortgage lenders. It is clear, as ordinary borrowers reap the whirlwind of the dodgy lending of some such institutions, that the taxpayer will have to pick up the tab at the end of the day. Repossessions have more than doubled in the past year, which is costing the State money in terms of court time and social welfare payments. Like borrowers, lenders have responsibilities. The doubling in the rate of repossession over the past year means that borrowers are paying a disproportionately higher price than lenders. Sub-prime mortgage lenders, in particular, are rushing to the High Court at the earliest stage to get repossession orders. When repossessions are granted, the State often has to step in and provide alternative accommodation. In effect, the taxpayer is paying for the irresponsible actions of the lenders in the first place.
We have repeatedly called for action to be taken to help people who get into difficulty with their mortgages to make good their debts. The measures contained in the Bill before the House do not really represent a solution to the problems I have mentioned. Having said that, the legislation is welcome on a number of grounds. Lenders will now have to begin home repossession cases in the Circuit Court, rather than the High Court. I ask the Minister to comment on whether procedures will change to reflect the change to the Circuit Court.
The Minister also spoke about rent reviews. What is his best guesstimate for when this legislation will be enacted? Will that happen within a number of months or weeks? People want to avail of this potential means of reducing their outgoings. We would be grateful if the Minister could clarify when he expects that to be in place.
There is nothing to prevent people who are currently entered into leases from entering into reviews with a view to reducing their rents. We are trying to send a signal, albeit in relation to future leases. I know the Labour Party has published a Bill. We looked at it and to be honest it was endeavouring to meddle in the area of freely entered into leases and agreements, heretofore made. Given that we are dealing with commercial property in this respect, it is inconceivable that these leases heretofore would have been entered into without legal advice. Apart from the legal difficulties of intervening in a freely entered into contract, by legislation, it is fraught with all types of difficulties. In the context of the upward-only rent reviews for the future, I wanted to, in effect, send a strong signal. This has not yet commenced. We accepted an amendment in the Dáil to include agreements for leases, recognising that these have the same effect as leases. Substantial representations were made to us and we recognise that.
I also recognise that this to a certain extent, may very well discommode some of the transactions that are in planning, but there is no agreement. Life in the commercial property sector is difficult enough as it is, so I indicated in the Dáil that I would commence this part of the legislation at a time when we believe it is appropriate to bring them on. I have done this with the Intoxicating Liquor Bill, in so far as I was willing to listen to representations made to me to the effect that it could be done better than by statute. If we find that from now on there is a reasonably level playing field and that new leases facilitate the ability to review rent downwards as well as upwards, then I would hesitate to bring this part of the legislation into operation. To a certain extent this is something that will be kept under review and we shall consult with the various interests involved.
As regards the case referred to by Senator Regan, from 2006, this is taken care of in Part 6, section 28(3) dealing with co-ownership. The court order provision is in section 29. We repealed section 2 of the Statute of Frauds in so far as this relates to contracts for sale or other dispositions of estates or interests in land. In effect, we have repealed the Statute of Frauds in so far as it relates to land or interests in land. Obviously we did not repeal it, in this legislation at least, as regards other types of property. However, I acknowledge what the Senator says. Given all these Acts we are now repealing, it will be a pleasure for law students for years to come that they do not have to wade through this multiplicity of legislation. Hopefully, law students of the future will remember us lovingly because we have made the whole area of land law somewhat easier to study.
We shall give the Minister the credit.
I thank everyone concerned, my officials in particular, whom I forgot to thank as regards the Defamation Bill. They have laboured long and I want to put on record my thanks for the work they did on that legislation. Equally, I am thankful for the work the officials behind me did in relation to this Bill.
I want to thank the Law Reform Commission. A number of people attached to the commission are in the public Gallery, including Ms Justice Catherine McGuinness. I thank them for the immense work they did on this Bill. I will not add further to the comments I made earlier, but this is very good legislation which will stand the test of time. I thank all the interested parties that contributed, including the conveyancing committee of the Law Society along with others who have made submissions.
I also want to acknowledge the work that has gone into this legislation. Quite a number of amendments were taken on board. The issue just mentioned by the Minister as regards the rent reviews is very contentious and has wide implications, but I believe what is included in the Bill is very appropriate. It is extraordinary legislation because it deals with so many statutes and complex issues. The combination of the Law Reform Commission and the hard work done in this House, particularly the drafting by the officials, add up to a superb body of work. I compliment all concerned.
I should like to be associated with those remarks. This is complicated legislation and its passing in the House today is a tribute to the work of the Minister as well as his staff. It has the potential to have far-reaching consequences for the lives of thousands of people, so we wish it well.
I concur with those remarks. Reflecting on my first year as a law student, I had to do Roman law, jurisprudence, legal history going back to the Magna Carta and so on. Perhaps we are giving today's law students too much of a soft option in that they do not have to do so much research. I should be worried lest they get lazy, because they will not have to put in the effort we had to in our day. Having said that, I sincerely welcome the Bill and thank all those involved, including the Law Reform Commission. It is mind boggling to consider that some of the statutes repealed here are 1,000 years old.