Irish Region

Read Insolvency in the Irish Agenda on the impact of non-registration on a loan purchaser's power to appoint a receiver.

The impact of non-registration on a loan purchaser's power to appoint a receiver

There are two mutually exclusive systems for the registration of land in Ireland: the registration of documents in the Registry of Deeds and the registration of title in the Land Registry. Property registered in the Registry of Deeds is said to be ‘unregistered’ and property registered in the Land Registry is said to be ‘registered’.

Legislation on the registration of registered title provides that until the transferee is registered as the owner of the charge, the transfer of the charge does not confer any interest in the security to the transferee. What this means is that purchasers of loans over registered land cannot effectively exercise their power of sale and give good title to a purchaser without being registered as the owner of the security. Judgment given in a recent High Court injunction application suggests that the non-registration of ownership of security has an even greater impact on loan purchasers than was previously understood.

In Harrington v Gulland Property Finance Limited a company purchased loans in respect of registered land. The company failed to register the transfer of the charge in the Land Registry. A year later, the company appointed a receiver pursuant to the power contained in the charge. The property owners sought and were granted an injunction against the acting receiver. The High Court held that the property owners had made out an arguable case that in the absence of registration, the contractual interest in the charge had not become transferred and that the company could not rely on a contractual power contained in that charge to appoint a receiver.

Interpreting the legislation in this way prevents a loan purchaser exercising a contractual power to appoint a receiver where its interest in the security over registered land has not been registered. Prior to enforcement of security, loan purchasers of registered land should ensure that they are registered as owners of the security. It will be interesting to see if the High Court's interpretation of this legislation at the injunction application is confirmed at the full hearing. We will circulate an update following the full hearing of the case.

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