Aodhán Ó Ríordáin (Dublin North Central, Labour) | Oireachtas source

On behalf of the Minister for Justice and Equality, I welcome the opportunity to discuss the topic of mortgages and receivers.

This issue forms part of the overall context of mortgage arrears and it should be recognised that things are improving in this area. There has been a welcome increase in engagement between borrowers and lenders which has resulted in over 115,000 sustainable restructured solutions being put in place. In addition, this year we have seen an improvement in the numbers of people availing of the services provided by the Insolvency Service of Ireland. It should be acknowledged that the majority of solutions reached through the ISI have resulted in successful outcomes for the borrower.

The Government recognises that the level of mortgage arrears is a significant economic and social challenge, and is acutely aware of the difficulties some borrowers are facing in meeting their mortgage commitments. The Government is committed to continuing to address this issue as a priority.

The Government is fully aware that high levels of personal debt threaten the participation of individuals and families in the current economic recovery. We have already taken decisive action in a number of areas in order to assist people in mortgage arrears difficulties, such as the introduction of the personal insolvency legislation; the provision of the mortgage arrears advice and information helpline; and the provision of independent financial advice for borrowers on the terms of the restructure arrangements offered to them by their lender.

The Government is currently reviewing the operation of personal insolvency legislation and the independent advice service offered to distressed borrowers with a view to strengthening those initiatives. In addition, the mortgage to rent scheme - under which the borrower surrenders the property to the lender who then sells the property to an approved housing body which then becomes the landlord allowing people to stay in the family home - is being reviewed with a view to improving the scheme to ensure that it is available in suitable cases.

As Senators will be aware, the Government has already made it clear that it will shortly be announcing a package of measures to support the existing framework and improve the uptake of personal insolvency solutions. The overall aim of the Government's approach to this issue remains the same as it has always been, which is to ensure that a full range of options is available to distressed borrowers and to keep as many people in their homes as possible.

The appointment of a receiver over mortgaged property is one of the remedies available to a lending institution in cases of mortgage default. It is important to note at the outset, however, that this is a remedy that applies in the main to commercial property, which may include buy-to-let residential property and farmland. It does not, therefore, apply to the principal dwellings of defaulting borrowers. It is important to bear in mind that the properties to which receivers are appointed are not those covered by the Central Bank's code of conduct on mortgage arrears which seeks to ensure that lending institutions act in a scrupulously fair manner and exercise appropriate forbearance, in the case of principal dwellings.

The appointment of a receiver is normally an alternative to the lender seeking actual repossession of the mortgaged property. Instead of taking possession, a receiver is appointed to manage the property. In the case of a shop, restaurant or licensed premises, the goal may be to achieve more efficient management and operation of a viable business; in the case of buy-to-let residential property, the intention is more often to collect rental income produced by the property and to divert it towards servicing the mortgage.

A power to appoint a receiver in cases of mortgage default is set out in section 108 of the Land and Conveyancing Law Reform Act 2009. It largely reproduces a much earlier provision on the same lines in the Conveyancing Act 1881. These powers are exercisable by the lender without recourse to the courts. In such cases, the receiver's role is limited to receiving income produced by the mortgaged property. The receiver is generally also required to manage the property.

The mortgage contracts applicable to commercial property loans normally contain more detailed contractual terms concerning the appointment of receivers. They may, for example, grant the receiver more extensive powers, such as power to manage the property, lease it or sell it. These provisions form part of the terms and conditions on which the loan is granted by the lending institution concerned and, again, may be exercisable without recourse to the courts.

While the Private Members' motion refers to the lack of regulation exposing borrowers to oppressive and wrongful conduct by receivers, I am not aware of any widespread concerns over the matter. Receivers are normally accountants or solicitors and are subject both to the regulatory and disciplinary regime applicable to their professions and the law of the land. I do not, therefore, accept the notion that the lack of a specific licensing regime leaves the public at risk of abuse by unscrupulous receivers.That said, the Minister is aware from media reports - this has been referred to by Senators and in the Dáil debate recently - of particular cases in which tensions appear to have arisen where receivers are seeking to take control of mortgaged property. These appear to be isolated exceptions to the general behaviour of receivers. Let me make it clear that the Minister condemns the use of heavy-handed actions by receivers in this type of instance and deplores the use of men with dogs and balaclavas turning up in the middle of the night to effect a repossession, as highlighted in recent reports.

The Minister is conscious that the appointment of a receiver over mortgaged property is likely to be both traumatic and stressful for the borrowers involved or any tenant who may be living in the affected properties. In many cases, their hopes and dreams of building a successful business for themselves and their children may have been dashed by events beyond their control. In other cases, what seemed at the time like an attractive investment opportunity has not been a success and the lives of many are badly affected as a result. The Minister, therefore, urges receivers to act with tact and consideration and to avoid heavy-handed actions. They must act within the limits of the laws governing their appointment when exercising their powers. The provision of adequate information on their role and statutory tasks for those likely to be affected is particularly important. In this context, the Minister notes that the Banking and Payments Federation Ireland has produced the helpful A Residential Tenant's Guide to Receivership which provides appropriate information for tenants affected by the appointment of a receiver for a buy-to-let property. The provision of a similar guide to cover other cases of receivership would, the Minister believes, be helpful and I understand she intends to write to the federation in this regard.

Receivers must act within the law of the land. The proceedings in which they take control of property are, first and foremost, civil proceedings to which the Garda is not a party. There may be situations where gardaí become aware or are notified that property is to be the subject of enforcement proceedings and, in these circumstances, it is an operational matter for Garda management to assess whether a Garda presence is advisable so as to prevent any risk of a breach of the peace. Preserving public order is an essential task of An Garda Síochána, whether in circumstances relating to repossession, the appointment of a receiver or otherwise. Where gardaí attend in these circumstances, it is important to understand they do not generally have a role in the process itself and are not in a position to act in any way as an arbiter in the proceedings. There may be some confusion on this point in the public mind, but this is the legal position and the Garda is very clear about this when present in such circumstances. Issues of difference or difficulty in the enforcement of a court order or contractual obligations between parties are matters for the parties concerned to resolve before the courts.

Tensions can also arise where, for whatever reason, attempts are made to obstruct receivers in discharging their duties. Where a breach of the peace occurs in such cases, provisions in public order and related legislation are applicable. Similarly, where an individual has concerns that a criminal action may have been committed by any person in the course of such proceedings, this is a matter which An Garda Síochána will investigate.

The Minister appreciates the intent behind this private Members' motion but considers that it must be opposed, mainly because the remedies put forward in the motion cannot be put in place. I note that the motion calls on the Minister to amend the rules of the superior courts and the Circuit Court to include new provisions regulating the conduct of receivers appointed by the courts. The general position is that court rules are made under the relevant statutory provisions by the respective rules committees, not by the Minister for Justice and Equality. It would not be appropriate, therefore, for the Minister to intervene in the manner suggested in the motion. In addition, the House should note that where a receiver is appointed by a court, he or she becomes an officer of the court, is answerable to the court and required to act in the interests of all the parties involved. Again, the Minister would not have any function in this area.

The Minister is aware that there is the possibility that a receiver appointed over a mortgaged property is not a member of a regulated professional organisation and, therefore, not subject to the codes of conduct and ethics which would apply if he or she was a member. In such a circumstance the Minister believes it would be reasonable to put in place some rules and regulations governing their actions. For that reason, she has asked me to inform the House that she will be undertaking an analysis of the issue to examine whether further regulations should be introduced to govern the conduct of receivers. This analysis will, inter alia, examine the remedies put forward in this private Members' motion. The intention is to produce a report for discussion at the Joint Committee on Justice, Defence and Equality to allow the committee, on the basis of the analysis and its own examination of the issues involved, to consider what recommendation it would make as regards action to be taken.

I again thank Senators for raising this issue. I look forward to listening to the rest of the debate.