Derek McDowell (Labour)

This is an important amendment to the Bill. It responds to concerns expressed in earlier debates about the delays and costs currently associated with the registration of land. Under current legislation, if a registered owner of land wishes to deal with it in any way, a land certificate issued in respect of the land must be presented to the Land Registry before further transactions can be registered. Similarly, the legislation requires that the Land Registry issue a certificate of charge on the mortgage of registered land and that this certificate be produced in respect of any further dealings.

From meetings we held with the parties involved, including the Land Registry, the Law Society and the Irish Mortgage Council, a consensus has emerged of a radical kind, namely, that the land certificate and certificate of charge system is completely incompatible with the introduction of e-conveyancing, which is a product the Government is trying to advance. The Department and I became convinced that such a system cannot continue if we wish to progress to a fully electronic conveyancing system with all of the benefits e-conveyancing would bring to practitioners and consumers.

The main reason current legislation requires the submission of any existing land certificate is that it could have been lodged with a financial institution as security for a loan by way of an equitable deposit, which is generally referred to as an equitable mortgage. While such informal mortgages have become less common, the fact that any outstanding land certificates must be presented before any new transaction in respect of the property can be registered gives rise to a significant administrative burden for the Land Registry. Moreover, the predictable loss and misplacement of certificates, which may have issued many years ago and often decades previously, cause long delays and add to the costs of conveyancing.

The new section provides for the phasing out of land certificates over a three-year period. Specifically, it provides that land certificates and certificates of charge issued before the commencement of subsection (1) and not already cancelled will cease to have any force or effect three years after the commencement of subsection (2). If someone has loaned in a private transaction or as a lending institution on foot of a deposit or arrangement whereby he or she held onto the land certificate, he or she will effectively have three years to do something with his or her interest in the land. Otherwise, it will cease to have any significance by the end of that time. In addition, we have provided that section 105 of the 1964 Act, which requires the production of a land certificate or certificate of charge on the lodgment of a dealing in the Land Registry, shall cease to operate three years after the commencement of subsection (2).

I am making provision for the conversion of any outstanding equitable mortgages into legal charges during that three-year period. Subsection (3) contains details of this conversion process and also requires the new authority to publish the new provisions and provide information on their implications for holders of land certificates or certificates of charge. This will not be done by stealth — it will be publicly advertised so no one can say later that he or she never heard about it and had been relying on keeping someone else's land certificate under the pillow as security for a loan or whatever.

Despite the provision that adequate notice be given of these changes, it is possible that some people may not become aware of them or their implications and could suffer financial losses as a result. This might arise by reason of a person suffering from a disability. For example, if someone received one of these certificates but developed Alzheimer's disease or something similar, he or she might be prejudiced and could not grasp the significance of a newspaper advertisement.

In practice, this is unlikely to arise, except possibly in the case of a private transaction between individuals, as presumably the banks will not develop Alzheimer's disease. For this reason, I have made provision in subsections (4) to (8) for a compensation mechanism. In the event of it being used, the holder of a land certificate or certificate of charge could apply to the court for compensation for the claimed financial loss. Under the stringent conditions set out in subsection (5), the court could declare that the holder was entitled to compensation and determine the amount. That provision was included in an abundance of caution, in case someone's property rights, particularly those of a vulnerable person, could be extinguished without their knowledge and to their prejudice.

I readily acknowledge that these changes are far-reaching and radical. However, as we move towards e-conveyancing, the idea of producing 30 year old pieces of paper which may have been in deed boxes, under beds, in solicitors' offices, in bank safes or whatever before one can do anything in respect of land is simply not compatible with an electronic system. Hence, although this change is radical, it is justified and necessary if we are to move to the e-conveyancing of land.