By Caitriona Leahy, Associate Solicitor, Property Department
The Land and Conveyancing Law Reform Act 2009 (“the Act”) provides for fundamental reform and modernisation of land law and conveyancing law and aims to simplify the law and the conveyancing process. All parts of the Act came into force on 1st December 2009 save for provisions in section 132 dealing with rent review which came into force on 28th February 2010.This article provides an overview of some of the key changes introduced by the Act.
Co-ownership of land arises where the legal title to land is held by two or more persons. The two main types of ownership are tenancy-in-common and joint tenancy. A tenancy-in-common confers each owner with a distinct share which can be succeeded to on the owner’s death. The key feature of a joint tenancy is the right of survivorship, whereby on the death of one joint tenant, the deceased owner’s interest ceases and the land becomes vested in the surviving joint tenant(s). Joint tenancies can now only be severed and converted into a tenancy-in-common with the prior written consent of all the joint tenants or by court order. Registration of a judgment mortgage against the interest of a co-owner will not sever the joint tenancy and if the joint tenancy remains un-severed, the judgment mortgage will be extinguished on the death of the party against whom the judgment mortgage was registered.
Legal title to easements, such as rights of way, will only be acquired by long user if the claimant obtains a court order to this effect and it is registered in the Property Registration Authority or Registry of Deeds, as appropriate. The person claiming such right must hold at least 12 years uninterrupted user. Accordingly, after 12 years of non-use an easement will be extinguished unless it is registered. Persons holding rights based on the law prior to introduction of the Act (i.e. 20 years user) must bring their claim before 30th November 2012, failing which, the required user period must be acquired from commencement of the Act. Property owners who use unregistered rights of way to gain access to their property should take action without delay. Alternatively, the rights of way or other easements can be secured by a legal agreement drawn up between the parties, for example, by a grant of right of way from the landowner over his property in favour of the person requiring the right.
A landowner now has a statutory right to undertake works to a party structure (i.e. dividing walls and boundaries) for the purpose of complying with any statutory provision, notice or order, or reserving the party structure, building or land of which it forms part and can enter neighbouring land to carry out these works. The landowner must make good any damage caused, but may claim for a contribution to the works from the neighbouring owner in proportion to his likely use and enjoyment of the works. In the event of dispute, application may be made to the District Court for an order to authorise the works. This measure is a practical solution in cases where common property exists and the parties have reached an impasse or are in dispute in relation to works to be carried out or access to carry out works.
Unless the contract provides otherwise, a purchaser will now acquire a beneficial interest in a property upon entering an enforceable contract for the purchase of same. Accordingly, a judgment mortgage registered after signing the contract will only attach to the vendor’s legal interest in the property. That interest will disappear by execution and delivery of a deed in the case of unregistered land and registration of a deed of transfer in the Land Registry in the case of registered land, thus rendering the judgment mortgage ineffective. However, it will not always suit the parties that the beneficial interest passes especially where the transaction is vatable. Accordingly advice should be taken prior to entering into the contract.
An important distinction is made between housing loan mortgages and other forms of mortgage. A housing loan mortgage is essentially a loan to a consumer on the security of a dwelling or to a non-consumer on the security of the principal private residence of the borrower or his dependants. A number of measures have been introduced by the Act to provide greater protection for home owners which cannot be excluded from a housing loan mortgage. However, they can be contracted out of in the case of other mortgages, e.g. commercial mortgages. These measures include:
- A mortgagee (e.g. a bank) cannot take possession of the mortgaged property unless it is for protecting the mortgaged property or realising the mortgagee’s security and a court order for possession, or the mortgagor’s (the owner) written consent to possession (within the previous seven days), has been obtained. Similar conditions apply in relation to a power of sale, but 28 days prior notice must also be served on the mortgagor.
- Subject to the terms of an order for possession, a mortgagee in possession must take steps to sell the mortgaged property within a reasonable time. If this is not appropriate the mortgagee must attempt to lease it and use the rent to reduce the interest and mortgage debt.
- The mortgagee’s right to consolidate housing loan mortgages has been abolished. This means that a mortgagor can now redeem any housing loan mortgage without having to discharge any money due under any other mortgage with the same mortgagee.
- A mortgagor is entitled to seek an order for sale of the property whenever an action is brought against him in relation to the property, such as for repayment. The court is given wide discretion as to whether to make the order and the terms of any order made.
- The mortgagee has a duty to obtain the best price reasonably obtainable when selling the mortgaged property and notify the mortgagor of the outcome of a sale.
A creditor who has obtained a judgment against a person may apply to the Property Registration Authority to register a judgment mortgage against that person’s interest in land. The judgment mortgagee may apply to court for an order for sale of the land, division of the sale proceeds and such other order for enforcement of the judgment mortgage as the court deems fit.
Rent Review Clauses
From 28th February 2010, upwards only rent review clauses are no longer permitted in leases of property used wholly or partly for carrying on a business. Accordingly, a review of rent may now result in a decrease, or increase of the then passing rent or in the rent remaining the same. However, the rent can still be reviewed by reference to open market value, the consumer price index or on such other basis as the parties agree. This measure does not operate retrospectively so the position of tenants under existing leases will not change. This effectively creates a two-tier market, with existing commercial leases operating at a disadvantage.
Time will tell if the key changes in the Act will assist in making the law and the conveyancing process more accessible and comprehensive.
For more information on the new land and conveyancing laws contact our Property Department.
Joint tenancies may only be severed and converted into a tenancy-in-common now by written consent from all the joint tenants or by court order.
New rules of registration for legal entitlement to easements.
There is a right of access to maintain party structures and financial contributions from the adjoining landowner can be sought.
Beneficial interests in property now pass under contracts to purchase.
New rules apply in respect of when mortgagees can take possession of dwellings and principle residences.
Upwards only rent reviews for new commercial leases are no longer permitted.