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[2019] Irish Judicial Studies Journal Vol 3
EU LAW AND MORTGAGE POSSESSION CASES
– WHAT IS IT ALL ABOUT?
Abstract
Over 25 years ago, the EU legislated against unfair contract terms in consumer contracts, and Ireland
adopted that law. It is now being applied by the CJEU in mortgage enforcement cases, and has 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 any unfair terms. This article considers
the recent varied and somewhat hesitant development of Irish law on this topic.
Authors: Dr Padraic Kenna and Julie Sadlier. Dr Padraic Kenna is Senior Lecturer in Property and
Housing Law at NUI Galway. Julie Sadlier is a Solicitor specialising in Possession and Personal
Insolvency Law.
Introduction
A quarter of a century ago, Ireland adopted the EU Directive on unfair contract terms in
consumer contracts (UCTD) setting out the means for consumers to enjoy these
European consumer rights. In recent times, the Court of Justice of the European Union
(CJEU) has applied these consumer protections to mortgages as consumer contracts.
Irish consumers, however, have yet to fully enjoy these protections, with reluctance by
courts and the relevant regulatory State bodies to subject standardised non-negotiable
mortgage contracts to scrutiny.
This issue is significant. Central Bank of Ireland managers predict that some 14,000
households will lose their homes,1 and suggest that sales of distressed mortgages to third-
party funds are ‘legitimate and necessary’.2 Mortgage lending is at the maximum of
Central Bank of Ireland permitted levels and house prices are rising.3 Meanwhile, the
level of mortgage possession cases shows no sign of decreasing, with significant numbers
of cases in the courts system.4 However, recent commentary seems to suggest limiting
the potential consumer protection of EU law to mortgage consumers in Ireland, and
there is a unique focus on the role of the borrower’s solicitor. The application of the
1 ‘Over half of the cases progressing to long-term arrears are classified as involving the potential for loss of ownership
outcomes’. See Sharon Donnery, et al, ‘Resolving Non-Performing Loans in Ireland: 2010-2018’ (Central Bank
Quarterly Bulletin April 2018) p 67, https://www.centralbank.ie/docs/default-source/publications/quarterly-
bulletins/qb-archive/2018/quarterly-bulletin---qb2-2018.pdf?sfvrsn=4.> accessed 24 February 2019. The Central
Bank Quarterly Statistics on Mortgage Arrears and Repossessions (19 December 2018) showed that there were some
28,197 PDH accounts in arrears over 720 days. See Central Bank of Ireland, ‘Residential Mortgage Arrears &
Repossessions Statistics: Q3 2018’ (Central Bank of Ireland 2018)
source/statistics/data-and-analysis/credit-and-banking-statistics/mortgage-
arrears/2018q3_ie_mortgage_arrears_statistics.pdf?sfvrsn=10> accessed 16 March 2019.
2 Eoin Burke-Kennedy, ‘Sale of distressed loans ‘legitimate and necessary’ – Sibley’ The Irish Times (Dublin, 06 June
2018).
3 Eoin Burke-Kennedy, ‘Value of mortgage drawdowns rose 20% to €8.7bn last year’ The Irish Times (Dublin, 29
January 2019). ‘The value of mortgages taken out in Ireland last year rose nearly 20 per cent to €8.7 billion, with first-
time buyers representing the biggest segment of the market. Figures from the Banking and Payments Federation of
Ireland show that some 40,203 mortgages with a value of €8.7 billion were drawn down in 2018. In value terms this
was €1.4 billion more than the previous year’.
4 Some 28,000 mortgage accounts are in arrears over two years, with many over 4 years, and in these situations
financial institutions have invariably commenced legal proceedings to realize the security in the mortgage, requiring
vacant possession before sale. The data recording by the Central Bank of Ireland and the corresponding data by the
Courts Service on the extent of mortgage possession cases is not readily compatible.
