MORTGAGE ARREARS: LIST OF FACTORS A COURT MUST CONSIDER BEFORE ORDERING REPOSSESSION OF BORROWER’S PRIMARY RESIDENCE

The Land and Conveyancing Law Reform (Amendment) Act 2019 (the “Act”) was signed into law by the President on 10 July 2019 and commenced on 1 August 2019. It amends the Land and Conveyancing Reform Act 2013 (‘the 2013 Act’) and introduces a list of factors that must be taken into consideration by the Court when a lender applies for a possession order in respect of a borrower’s primary residence.

The Act makes it mandatory for a Court to consider a homeowner’s personal circumstances before a repossession order can be issued and imposes an important onus on lenders to engage in a constructive manner with any proposals put forward to them by the borrower in an effort to resolve mortgage arrears. The Act broadens the protections given to borrowers under the earlier Personal Insolvency legislation, and allows the Court to adjourn repossession proceedings to facilitate a borrower purring forward a proposal for a Personal Insolvency Arrangement (“PIA”).  

The Act broadens the matters which a Court will have to take into consideration where the property is the Principle Private Residence of the borrower or a spouse/civil partner and one of the following conditions is met;

(a)The court has already adjourned the proceedings for the purposes of formulating a proposal for PIA.

(b)The borrower must have sought assistance from a Personal Insolvency Practitioner (PIP) to resolve his or her arrears.

(c)The borrower was refused an adjournment for the purposes of getting a proposal together.

(d)The borrower has participated in good faith in a designated scheme to reduce arrears, such as a PIA. A designated scheme is a scheme whose objectives include providing persons who are in mortgage arrears in respect of their homes with assistance to help them deal with such arrears and, so far as is possible, to assist them remain in their homes.

The Court must take account of the following: -

Whether the making of a possession order would be proportionate in all the circumstances of the case;
The borrower’s circumstances and his or her dependents;
Whether the lender has informed the borrower of terms on which they would be willing to settle the matter;
Details of any proposal made by the borrower to enable them to remain in their home or secure alternative accommodation;
Any response of the lender to the borrower’s proposal;
How the parties have conducted themselves in any attempt to find a resolution;
In evaluating what is proportional, the Court may have regard to: -

·Total amount that remains to be paid on the primary residence;

·The outstanding arrears of payments due.

The advised market value of the primary residence