Achievements of Land and Conveyancing Law Reform Act 2009 - Essay Example

? Achievements of Land and Conveyancing Law Reform Act 2009 Introduction In 2004, the land reform commission in its consultation paper on the reform and modernization of Land law observed that the law of mortgages is extremely outdated and complex and needed considerable reforms. There are considerable reforms which have been achieved in law of mortgages after the introduction of the Land and Conveying Law Reform 20091. The land reforms were occasioned by the need to modernize the property law to adhere with the current social, economic and demographic changes. Another objective was to simplify the law and make it more accessible and understood. Much of the property law on conveying had been governed by laws that were enacted in 19th century thus most of the rules and principles were obsolete. The areas which were covered in the consultations include estates in land, mortgages, future interests, contracts for the sale of land and conveyances, settlements and trusts. The Act provided repeal of the enactments which were considered obsolete depending on the modern circumstances and modernization of the land in regard to lis pendens with the amendment of the registration of deeds and Title Acts of both 1964 and 20062. The Act came in to force on 1st December 2009 with the exception of Section 132 which deals with rent reviews which came in force on 28th February 2010. The Land and Conveyancing Law Reform Act 2009 provides inter alia for the amendments of law dealing with the review of rents and variation of the trusts. The Act makes an inclusive definition of land whereby land is defined as any estate or interest over the land whether corporeal or incorporeal. Land also includes land covered by water, buildings, structures, mines, minerals, and airspace which is above the surface of the land or any structures. The Act also expands the definition of “incumbrance” to include any charge, lien, mortgage, portion, annuity and trust securing capital sum or annual sum3. The land reforms comprise the fundamental reforms of Irish Land law since 19th century. The Act has simplified the registration of Land and mortgages by providing e-conveyancing. The Act has abolished the vestiges of feudal tenure that may be surviving in the modern era but has retained the estates doctrine with amendments so as to ensure only two legal estates of land can exist in Irish Law. The two estates include the leasehold estate and freehold estate of a fee simple in possession4. The principle that contracts must be evidenced by writing has been rested in modern and simple language and the minimum period for production of a good root of title has been minimized from 40 years to 15 years. The deeds which may be executed by individuals no longer require as seal but must be executed in a valid manner since there must be two witnesses to attest their signatures. The Act has recognized the deeds that may be executed by foreign-registered companies if done according to the foreign law applicable for the particular company. Another major simplification is provision fro the application of the rules of notice of the Act if instruments such as mortgages omit the provisions and rules of serving a notice including the criteria of serving the notice through e-commerce or facsimile machine5. The law has brought important changes since it is no longer possible to sever a joint tenancy. Since all the tenants must either consent to the severance or a court procedure must follow where the consent is not possible to obtain. Accordingly, registration of any mortgage against the interest of the joint tenant will not sever the joint tenancy. However, if such mortgage remains unsevered, the judgment mortgage will only extinguish after the death of the judgment debtor. The law has made it possible for freehold covenants created since it came in force to be enforced against successors in title of the original covenantor. The rule of Tulk v Moxhay which allowed negative covenants to bind the successors has been abolished by the Act. The Act has allowed servient owners of land to apply to courts for discharge of part or whole or modification of the freehold covenant if such compliance results to unreasonable enjoyment of the servient land6. On the part of conveyances and contracts, the Act replaces the Statute of Frauds 1695 with Part 9 of the 2009 Act stating that no action is enforceable unless agreement to the action is in writing and signed by the individual against whom the action is brought or his authorized agent. Another major achievement is abolishing the rule of Bain v Forthergill which restricted the damages to be recovered for breaching a contract of sale of the land when the title is defective. The Act makes it a criminal offence to falsify information or commit a fraud by concealing material facts concerning the land in the contract7. Mortgages is one of the complex area in Irish land law that has been simplified by the Act. The Act expressly states that legal and binding mortgages will only be created by deed. The law of mortgages now applies to both unregistered and registered mortgages. The Act makes it impossible to create Welsh mortgage which includes any transactions where a chargee of land is entitled to possession of the land, take rents and profits in lieu of interest on a loan with the chargor being under personal obligation to repay the loan, but is not entitled to redeem8. The Law grants both the mortgagor and mortgagee equal powers and rights. A mortgagor is entitled to inspect and make copies of documents relating to the land as long as the right to redeem exists. A mortgagor can now redeem a housing loan mortgage without the need of making any payments due under any other mortgage with same mortgagee regardless of whether concerning the same property or not. Section 93, of the Act entitles a mortgagor who has the right to redeem may require the mortgagee to assign the mortgage debt to a third party as per instructions of the mortgagee without discharging the mortgage. Sec 97 up to Sec 111 of the Act provides for the powers and rights of the mortgagee concerning power of sale, abandoned property, appointment of receivers, mortgagee in possession, taking possession of the mortgaged lands, and application of any monies received. Mortgagors can now lease the land in their possession after seeking the consent of mortgagee in writing. Both the mortgagor in possession and mortgagee in possession can surrender or accept a lease that was previously granted9. The Act under Section 94 provides for the court order for the sell of the mortgage by the mortgagor in redemption, and raising payments for the mortgage debt. The courts have the discretion to grant enough time for payment of mortgage debt or redemption of the debt. The courts can also rule on the costs of sale or make a vesting order that conveys the mortgaged property to the purchaser. Under section 95, the law allows for joint mortgages and monies paid by such two or more persons should be held in a joint account. The receipt of the monies should be in writing of the survivors or last survivors of these people or legal representative of the last survivors. The Act has dealt with a major mortgage Law problem since the mortgagee’s right of foreclosure is now abolished. Under section 97, the mortgagee is prohibited from taking possession of the property without a court order or without a written notice of the mortgagor which should be made 7 days prior to the date of taking possession. This Act has simplified the process of mortgagee taking possession of the property since before such mortgagee would take possession of the mortgaged property without the consent of the mortgagor10. The law under section 98 (1), provides for the grounds of abandoned property by the mortgagor. The mortgagee can apply to the District court is he has reasonable grounds to believe the mortgaged property has been abandoned by the mortgagor or the property is at danger of deterioration in value due to access by unauthorized persons or trespassers11. The courts can grant the time period which mortgagee can retain the possession, the costs incurred by mortgagee which are to be added in mortgaged debt or direct works to be done by mortgagee in protecting the mortgaged property. This law has achieved a major milestone in protecting the deterioration of the property value when in the possession of the mortgagor while the completion of the mortgage debt is due12. Section 99 (1) of the 2009 Act which is subject to Sections 97 and 98 is a major achievement since it deals with the mortgagee in possession including the right to appoint a receiver to sell the property according to Section 100 or lease the property in accordance to Section 112. This Act has repealed Section 34 of the Act of 1957. The power of the mortgagee to sell the mortgaged property after taking possession is governed by Section 100. The mortgagee or appointed receiver may dispose the mortgaged property three months after proving a notice to the mortgagor requiring payment of the mortgage debt and subsequently the mortgagor failing to make the payment after the three months. The mortgagee has the powers to sell the property if such mortgage debt is payable by installments or part interests and part capital when such payments are in arrears for 2 months since the due date. If the mortgagor breaches any provision attached to the mortgage or any statutory requirements, the mortgagee can sell the mortgaged property after furnishing the mortgagor with 28 days written notice warning the possibility of sale of the mortgaged property13. However, the power of sale is only exercisable after grant of court order to sell or with the consent of mortgagor which should have been sought and granted 7 days prior to the sale. The mortgagee is not liable for any involuntary loss occasioned by the power of sale. The person entitled to power of sale can demand any person other than one having the mortgaged property any deeds and documents related to the mortgaged property which the purchaser under power of sale would be entitled to recover or demand14. This law has achieved its aim since the mortgagee is under an obligation to provide a notice to mortgagee within 28 days after sale of the mortgaged property and account to the mortgagor otherwise; he is liable for an offence. After the sale, the mortgagee can convey the sale subject to all interests and rights which have priority in mortgage. This Act protects the purchasers of the mortgaged property under the power to sell in Section 105 (1). The purchaser has no obligation to inquiry whether the power was legally granted or a notice was provided thus the title of the purchaser is not affected by improper sale or unauthorised sale. Individuals who may sale any loss due to improper sale can recover damages from the person exercising such power15. The Law has allowed the mortgagor the opportunity to lease the land provided a written consent of the mortgagee has been sought. If no consent is sought, the lease is voidable if lessee has actual knowledge of the mortgage. A mortgagee in possession can also appoint a receiver to preserve the land, raise income to settle the interest on mortgage debt or protect mortgagee’s security. This Act under Section 116 provides for the registration of judgment mortgage notwithstanding whether judgment debtor has sought a court order granting the execution of the mortgage. This Act has amended Sec 32 of the Act of 1957 by providing that the right of action will accrue from the date the judgment is enforceable and not the date of registration of the mortgage16. Case studies The recent judgments by Judge Dunne confirm the achievement of the Act in simplifying the mortgage law. In the case of Start Mortgages v Gunn and others, the decision prohibited the repossession of the mortgaged property by financial institutions. The Judge outlined that Registration of Title Act of 1964 Section 62 (7) had been repealed by Land and Conveyance Law Act of 2009. The Judge noted that for demands issued prior to 1st December, 2009, the lenders can seek recovery of the mortgaged land while for demands made after 1st December 2009 without any proceedings in court, the lenders had the right to apply for a court order for possession of the mortgaged property. In the case of Kavanagh and other v Lynch and others, Justice Laffoy ruled that agreements between the mortgagor and mortgagee including their rights, powers and remedies are enforceable notwithstanding the fact that 1881 Act was repealed by 2009 Act on mortgages. The provisions of over reaching do not apply in case of unregistered land since 1881 was repealed17. Conclusion The Act has simplified the procedure of creating mortgages. The Act also protects the rights and duties of both the mortgagor and mortgagee. The Act specified the criteria for seeking the power of sale and eliminates mortgagee’s absolute rights of foreclosure without a court order. Bibliography: Lyall, A. Land Law in Ireland. Dublin: Round Hall. 2010. Maddox, N. Land and Conveyancing Law Reform Act 2009: a commentary. Dublin: Round Hall. 2009. Wylie, JCW. Irish Land Law. Haywards Heath: Tottel. 2010. Wylie, JCW. The Land and Conveyancing Law Reform Act 2009: Annotations and Commentary. Haywards Heath: Tottel. 2009. Read More