A High Court ruling of 25 July 2011 has left many lenders without the right to apply for an order for repossession.

The court held that a lender cannot apply for an order for repossession where a mortgage was created before 1 December 2009 but a demand for repayment was not made until after that date. The Land and Conveyancing Law Reform Act 2009 came into force on 1 December 2009. The court found that where a mortgage was created before 1 December 2009, the lender may only apply for an order for repossession if it had made a demand for repayment before 1 December 2009. Ms Justice Dunne noted that this anomaly arose as an unintended consequence of the 2009 Act and its repeal of earlier statutory provisions. However, while she acknowledged the existence of a “lacuna” in the law, she determined that it was not the function of the courts to step in to fill this gap.

The court was ruling on four test cases brought by a number of lenders against borrowers represented by ‘New Beginning’, a group of lawyers which defends mortgage holders who are in default. The case could however have implications for other lenders seeking to enforce mortgages created before 1 December 2009 where a demand for repayment was not made until 1 December 2009 or later.

It is expected that the decision will be appealed but in the meantime, the government is expected to act to fill the gap in the law by enacting further legislation.

Contributed by Shane Kelleher, Delia McMahon.

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