EU Law And Mortgage Possession Cases - What Is It All About?
Author | Padraic Kenna - Julie Sadlier |
Position | Senior Lecturer in Property and Housing Law at NUI Galway - Solicitor specialising in Possession and Personal Insolvency Law |
Pages | 124-132 |
IRISH%JUDICIAL%STUDIES%JOURNAL!
124
[2019]IrishJudicialStudiesJournalVol 3
EULAWAND MORTGAGE POSSESSION CASES
– WHAT IS IT ALLABOUT?
Abstract
Over25years ago, the EU legislated against unfair contract terms in consumer contracts, andIreland
adopted that law.It is now being applied by the CJEU in mortgage enforcement cases, andhas become a
significant feature of an active EU consumer policy. National courts must carry out an ‘own motion’ or
‘ex officio’ examination of consumer contracts, in disputes, for anyunfair terms.This article considers
the recent varied and somewhat hesitant development of Irish law on this topic.
Authors: Dr Padraic KennaandJulie Sadlier. Dr Padraic Kenna is Senior Lecturer in Property and
Housing LawatNUIGalway. Julie Sadlier is a Solicitor specialising in Possession and Personal
Insolvency Law.
Introduction
A quarterof a centuryago, Ireland adopted theEU Directive on unfair contract terms in
consumer contracts(UCTD) setting outthe means for consumers to enjoy these
European consumer rights. In recent times, theCourtof Justice oftheEuropeanUnion
(CJEU)has applied these consumer protections to mortgages as consumer contracts.
Irish consumers, however,haveyetto fully enjoy these protections, with reluctance by
courtsandthe relevant regulatory State bodies to subject standardised non-negotiable
mortgage contractsto scrutiny.
This issue is significant. CentralBankof Ireland managers predict thatsome 14,000
households will lose their homes,1andsuggestthatsalesof distressed mortgages to third-
party funds are ‘legitimate andnecessary’.2Mortgage lending is atthe maximum of
CentralBankof Ireland permitted levels andhouseprices are rising.3 Meanwhile, the
level of mortgage possession casesshowsno sign of decreasing, with significant numbers
ofcases in thecourtssystem.4However,recentcommentary seems tosuggestlimiting
the potential consumer protection ofEU law to mortgage consumers in Ireland, and
thereis a unique focusonthe role oftheborrower’s solicitor. The application ofthe
1 ‘Over half of the cases progressing to long-term arrears are classified as involving the potential for loss of ownership
outcomes’. SeeSharonDonnery,etal,‘ResolvingNon-PerformingLoansinIreland:2010-2018’(CentralBank
QuarterlyBulletinApril2018)p 67,<https://www.centralbank.ie/docs/default-source/publications/quarterly-
bulletins/qb-archive/2018/quarterly-bulletin---qb2-2018.pdf?sfvrsn=4.> accessed24February2019.TheCentral
BankQuarterlyStatisticsonMortgageArrearsandRepossessions(19December2018)showedthatthereweresome
28,197PDHaccountsinarrearsover720days.SeeCentralBankofIreland,‘ResidentialMortgageArrears &
RepossessionsStatistics:Q32018’(CentralBankofIreland2018) ocs/default-
source/statistics/data-and-analysis/credit-and-banking-statistics/mortgage-
arrears/2018q3_ie_mortgage_arrears_statistics.pdf?sfvrsn=10>accessed16March2019.
2EoinBurke-Kennedy,‘Saleofdistressedloans‘legitimateandnecessary’ – Sibley’TheIrishTimes(Dublin,06June
2018).
3EoinBurke-Kennedy,‘Valueofmortgagedrawdownsrose20%to€8.7bnlastyear’The Irish Times(Dublin, 29
January2019).‘ThevalueofmortgagestakenoutinIrelandlastyearrosenearly20percentto€8.7billion,withfirst-
timebuyersrepresentingthebiggestsegmentofthemarket.FiguresfromtheBankingandPaymentsFederationof
Irelandshowthatsome40,203mortgageswith a valueof€8.7billionweredrawndownin2018.Invaluetermsthis
was€1.4billionmorethanthepreviousyear’.
4Some28,000mortgageaccountsareinarrearsovertwoyears,withmanyover 4years,andinthesesituations
financialinstitutionshaveinvariablycommencedlegalproceedingstorealizethesecurityinthemortgage,requiring
vacantpossessionbeforesale.ThedatarecordingbytheCentralBankofIrelandandthe correspondingdatabythe
CourtsServiceontheextentofmortgagepossessioncasesisnotreadilycompatible.
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