Seanad debates

Wednesday, 6 May 2015

Appointment of Receivers: Motion

 

2:30 pm

Photo of Colm BurkeColm Burke (Fine Gael) | Oireachtas source

I welcome the Minister of State. In talking about receivers or liquidators it is important to state they must at all times act within the law. If they act outside it, action can be taken. I know that the Garda in co-operating with receivers will ensure they will at all times act not only within the law but also within the terms of a court order. That is important.It is not a case of receivers going in without the necessary backup in terms of legal documentation. If the documentation is not in order, they are in breach of the law.

Senator Mark Daly overlooked the point about why we were in this situation. It is because decisions were taken about lending which should never have occurred. I came across one example where a relationship had broken up and the girl had decided to hold onto the house. There was a €220,000 loan, but she did not have the capacity to repay it at any stage. To buy out her partner, a further €40,000 was borrowed and the father agreed to be guarantor for that sum. When I came across the problem, however, he was acting as guarantor for the full €260,000 without realising he had done so. We have had such cases where people were asked to sign guarantees. I have raised with the Department of Finance and the Department of Justice and Equality the issue of whether we should introduce regulations under which someone could not offer the family home as security for a commercial loan. That is one of the reasons we have ended up with this problem. I was surprised by the number of people who had had their spouses sign guarantees for commercial loans and, as a result, had put the family home under threat. There was an interesting case which involved a credit union in west Cork that had tried to take possession of a family home, but the High Court had refused to make the order. The husband had taken out a €500,000 loan to purchase development land, but it was devalued once there was a downturn in the market. The credit union then went after the family home. There were two families involved. The High Court decided that as the wives had not signed any documentation and even though credit unions had judgments against the borrowers, it would not allow these judgments to be used to take possession of the family home. When the family home is involved, the money borrowed should only be used in that respect and not for commercial loans. We need to seriously consider and deal with the issue of such loans.

Much emphasis has been placed on a heavy-gang being involved in repossessions. I have come across cases where it was necessary to take repossession, for instance, where people living outside the jurisdiction were collecting rents through agents, yet making no repayments to banks. At the same time, they had the gall to let these properties to innocent people. One family had moved from Dublin to Cork where they rented a property. They were there three months and their children were attending a local school when they suddenly found the sheriff knocking on the door. Even though there were judgments against the person who owned the property, the tenants had not been so advised. The bank had then obtained an order for repossession. If we want to protect tenants, we should examine the issue of tenancy. Why is it that we do not have sufficient protection for tenants? In other European countries there are 20-year leases and tenants are protected no matter who owns a property. We need to do that here. That is what happens in the case of commercial properties and where there is a lease and tenants can be protected. I do not see why we cannot do the same in the case of rented property. Many people with young families now have no option but to rent. We should, therefore, re-examine tenancy legislation to ensure that, regardless of who owns a property, the tenant is protected. If there is an order for repossession, the bank can take it over, but it should not move a tenant out if it is his or her family home and he or she has no other place to go. We need to examine this important issue.

It is wrong to say receivers act in a heavy-handed manner all the time. They must act within the rules and if they breach the law in any way, they are accountable and cannot overuse their powers. The law should be properly interpreted by receivers who cannot exceed their jurisdiction. I am in favour of the Government's amendment, but we need to protect tenants where families are involved.

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