Judgment mortgages have become more commonplace in the last few years with considerable numbers of people finding themselves in difficult financial circumstances due to the property crash of 2008/9.
A judgment mortgage will only arise after the obtaining of a judgment against a debtor on foot of a debt.
The effect of then registering a judgment mortgage on a debtor’s property will be to give the registrar of the judgment mortgage priority over unsecured creditors of that debtor.
A judgment mortgage can be registered on either registered or unregistered property and it can be registered on the family home of a debtor, notwithstanding the fact that the spouse of the debtor may be a joint owner owe the debtor nothing and, in some circumstances, be unaware of outstanding debts..
Normally it is necessary to obtain the consent of a spouse to allow a charge to be registered on the family home but this is not the case with a judgment mortgage.
Land and Conveyancing Law Reform Act 2009
Under the Land and Conveyancing Law Reform Act 2009 a judgment can be registered as a judgment mortgage by applying to the Property Registration Authority and filling out the necessary forms and providing the necessary paperwork or proofs.
Part 11 of the Land and Conveyancing Law Reform Act 2009 deals with judgment mortgages.
Section 16 Land and Conveyancing Law Reform act, 2009 deals with registration of the judgment mortgage.
Section 17 deals with the effect of registration of a judgment mortgage:
|117.— (1) Registration of a judgment mortgage under section 116 operates to charge the judgment debtor’s estate or interest in the land with the judgment debt and entitles the judgment mortgagee to apply to the court for an order under this section or section 31 .|
|[JMA 1850, ss. 7 and 8][JMA 1850, s. 8]|
|(2) On such an application the court may make—|
|(a) an order for the taking of an account of other incumbrances affecting the land, if any, and the making of inquiries as to the respective priorities of any such incumbrances,|
|(b) an order for the sale of the land, and where appropriate, the distribution of the proceeds of sale,|
|(c) such other order for enforcement of the judgment mortgage as the court thinks appropriate.|
|(3) The judgment mortgage is subject to any right or incumbrance affecting the judgment debtor’s land, whether registered or not, at the time of its registration.|
|(4) For the purposes of this section, a right or incumbrance does not include a claim made in an action to a judgment debtor’s estate or interest in land (including such an estate or interest which a person receives, whether in whole or in part, by an order made in the action) whether by way of claim or counterclaim in the action, unless the claim seeks an order—|
|(a) under the Act of 1976, the Act of 1995 or the Act of 1996, or|
|(b) specifically against that estate or interest in land.|
|(5) Section 74 applies to a voluntary conveyance of land made by the judgment debtor before the creditor registers a judgment mortgage against that land under section 116 as if the creditor were a purchaser for the purposes of section 74 .|
Well Charging Order
The next step afforded to the judgment creditor is to apply to Court to get a Well Charging Order and Order for Sale. This is a request from the creditor to the court to recognise that their judgment mortgage is well charged on the property and to be granted an order for sale of the property.
However the court, as always, has a wide discretion to grant any order it sees fit and it can make a range of other orders as well including adjustment orders between joint owning owners and any other order it sees fit.
See section 31 Land and Conveyancing Law Reform Act 2009.
Order For Sale Execution
If and when the judgment creditor obtains an Order for Sale from court, be that Circuit Court or High Court, he will then have to go to and apply to have the property sold through the Examiner’s office in the High Court or the Circuit Court and the Courts will arrange the sale of the property by public auction.
Severance of a Joint Tenancy
Section 30 Land and Conveyancing Law Reform Act 2009 provides that a judgment mortgage does not sever a joint tenancy and the judgment mortgage will be extinguished upon the death of the debtor-that is, a surviving joint tenant has no liability for debts of the deceased joint tenant against whose interest in the property the judgment mortgage was registered.
However, section 31 of the Act allows the judgment mortgage holder to apply for a court order dispensing with the requirement to obtain the consent to sever the joint tenancy if consent is being unreasonably withheld.((e) an order dispensing with consent to severance of a joint tenancy as required by section 30 where such consent is being unreasonably withheld)
The MUINTIR SKIBBEREEN CREDIT UNION High Court Case
This is a vitally important case if you are concerned about this issue. Both the High Court and the Court of Appeal refused the credit union’s application for an order for sale where one of the spouses was unaware and was not a party to the loan agreement which gave rise to the judgment mortgage.
This case shows that the discretion afforded to the High Court to make an order for sale will be guarded jealously and it will be exercised having regard to the circumstances of each case.