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.