Leases & Mortgages
Limitation Periods Rent
A six-year time limit applies to actions to recover arrears of rent. Therefore, in the absence of an acknowledgement and other circumstances that stop the limitations period, legal action must be taken for rent within six years of when it fell due. A claim may be made in respect of rent accruing due within the last six years, but the earlier rent will not be recoverable in the absence of exceptions applying.
A person who takes possession of the rent wrongfully, may bar the right of the person entitled to the rent, by adverse possession. Therefore a person may be an adverse of possession of property, and potentially acquire title by collecting the rents for at least the limitation period, usually 12 years. Exceptions by which the possession may not be adverse or by which the time limit may be postponed applicable to physical possession may apply in this context.
The same six-year time limit applies in respect of arrears of a rentcharge. A rentcharge is an unusual species of property right. Where property is subject to a rentcharge and the rent is not paid for 12 years, this will bar the title to the rentcharge itself. This is not the position in respect of a standard lease or tenancy. See the following section.
End of Lease / Tenancy
The right to recover possession accrues when the tenancy terminates. Periodic tenants are deemed to end at the expiration of the relevant period. In contrast, where persons enter under a lease, their possession does not become adverse, for so long as the lease continues.
The right to recover leasehold property does not arise until the lease or tenancy has expired. The Statute of Limitations period of 12 years runs from the termination of the lease.However the continued occupation of the tenant may not necessarily be adverse, at least at first. A tenancy at will may arise.
A tenancy at will might continue indefinitely, so that the adverse possession would never arise. Possession cannot be adverse while rent is being paid. However, under the Statute of Limitations, a tenancy at will is deemed to be determined one year from the date of its commencement, so that time may begin to run at this point, if no rent is being paid.
A tenancy from year to year without a lease in writing is deemed terminated at the end of the expiration of the first year or other period. The right to take action for possession commences at this time.
The right to recover possession of leased property may arise earlier. A breach of condition may give the landlord a right to re-enter and recover possession. This is deemed to accrue on the date of breach of condition. Frequently, breaches will be waived in which event the right does not accrue and run.
Licence
A licence is a consent to use for be in possession of land. If a person is in possession of land by consent there cannot be adverse possession. The consent means that it is not “adverse”
There may be a thin line between a tenancy and a license. A license is a consent to occupy land. In principle, land can be occupied by a licensee free of charge. This would not be adverse, as the possession is by consent. There may be a thin line between a licensee by consent and a tenancy at will, where a person continues in possession without paying rent.
Squatting Against Lessee
Anomalies arise where a person acquires title by adverse possession against a lessee. Long leases are common in Ireland. Formerly the courts held that there a so-called parliamentary conveyance by virtue of legislation so that the squatter/subsequent possessor succeeded to the leasehold interest. However, the modern view is that the squatter does not succeed to the dispossessed owner’s title.
In accordance, with the modern approach, by which the leasehold interest is not transferred to the squatter, the English courts took the view that the person who has been dispossessed, retained the leasehold interest, which he could surrender to the landlord, who might take thereby take possession of the property.
The Irish Supreme Court refused to follow this proposition. It took the view that the tenant/the lessee who has been dispossessed could not surrender his title. To permit him to do so could allow him to retake title by acquiring the fee simple interest, which he might be entitled to acquire compulsorily.
A squatter who acquires a leasehold interest is obliged, in effect to comply with the leasehold covenants, as he may be otherwise subject to proceedings for forfeiture and ejectment for non-compliance, notwithstanding that he has is not in fact successor of the lessee.
The Land Registry takes the view that the Registration of Title Act permits it to register a squatter/dispossessor as the owner of the leasehold estate itself. The legislation arguably provides for a parliamentary conveyance, in respect of unregistered leasehold title. An application for the first registration of unregistered title in the Land Registry may be made by a person who has barred a leasehold interest. The Land Registry take the view that it may register the applicant as the owner of a lessee’s estate in the application for first registration.
Mortgages and Third Parties
If a person acquires title by long possession, the mortgagor’s (registered owner’s) title is extinguished. It would appear that the mortgagee i.e. lender loses its title at the same time as the mortgagor, because the charge or mortgage is registered upon or dependent upon the mortgagor’s title.This applies whether the mortgagee is a fixed charge holder or a floating charge holder.
It may be that the mortgagor’s title was already extinguished at the date of mortgage / charge. In this case the mortgage / charge would be ineffective.
It may be that the third party is in possession of the mortgaged land already, holding adversely to the mortgagor and time has been running in his favour. The courts have held that the third party’s rights are valid against the mortgagee notwithstanding that the mortgagee enforced its mortgage within the applicable time limits between the mortgagee and mortgagor.
Enforcement of Mortgage
The mortgagee’s right to enforce a mortgage and the mortgage debt are separate obligations. The title to the property may be statute barred but the mortgage debt may continue to subsist.
The opposite is not generally true. If the debt has become statute barred there is nothing to support the mortgage.
Interest on a mortgage is barred after six years. Arrears of interest in the mortgage are barred six years from the date on which the interest fell due. However, in order to redeem the mortgagor must pay the arrears, as it is not an action to recover the interest.
Action may not be taken to recover the principal money secured by a mortgage on land or personal property, after 12 years from the date upon which he right to receive the monies accrued. It will depend on the wording of the deed, as to whether the principal falls due on demand or automatically on breach or otherwise.
The mortgagee’s right of action for possession must be enforced within 12 years of when it arises or may become barred.This will not generally occur until the mortgage becomes enforceable. Mortgages are usually drafted in such a way as to ensure that the right to enforce does not arise until the full loan monies are demanded, notwithstanding any earlier breaches.
Position of Mortgagee
A mortgagee or chargee’s (lender) right to take action for possession and sell is barred 12 years after the date on which repayment is due. On the expiration of the limitation period for an action claiming the sale of the mortgaged property, the title of the mortgagee is extinguished. The mortgage debt is extinguished after an equivalent period (section 38).
A mortgage under the Statute of Limitations includes a judgment mortgage. The right of action accrues on the date on which the judgment becomes enforceable, and not on the date on which it is registered as a mortgage. The judgment debt is extinguished after 12 years.
Mortgagee in Possession
Where a mortgagee has been in possession for more than 12 years, neither the mortgagor nor any person who claims through him, may redeem the mortgage. The title of the mortgagor is extinguished. This position does not apply to a mortgagee who takes possession under a court order for possession, under the 2009 Land and Conveyancing Law Reform Act.
References and Sources
Primary Texts
Wylie on Irish Land Law Wylie 6th Edition 2020
Land Law In Ireland -Lyall 4th Edition 2018
Principles Of Irish Property Law de Londras 2nd Edition 2011
Equity and the Law of Trusts in Ireland- Keane 3rd Edition
Land Law Kenna & Murphy 2019
Land Law Pearce & Mee 3rd Edition 2011
The Limitation of Actions, 2nd ed Brady and Kerr 1994
Limitation of Actions Canny 2016
Other Irish Sources
The Land and Conveyancing Law Reform Act 2009: Annotations and Commentary -Wylie 2nd Edition 2017
Property Legislation 2009 2011 Cannon, Clancy, Kenna 2012
Irish Land Law – A Casebook: Adanan Maddox 2020
A Casebook on Equity and Trusts in Ireland – Wylie
Shorter Guides
Land Law Nutshell Cannon 2020
UK Textbooks
Land law C. Bevan 2nd ed.2020
Land Law: Text, Cases and Materials B McFarlane, N Hopkins and S Nield, (4th ed. OUP 2018)
Property Law R Smith(10th ed., Pearson, 2020)
Cheshire and Burn’s Modern Law of Real Property by Burn, E. H. 2011
Modern Land Law Dixon 2018
Elements of Land Law Gray, 2009
Property law: cases and materials Smith 2015
Land law Cooke 2015
Some cases
Ulster Investment Bank Ltd v Rockrohan Estate Ltd [2015] IESC 17
Feehan v Leamy [2000] IEHC 118
Mulhern v Brady [2001] IEHC 23
Hickson v Boylan [1993] IEHC 1
Scanlon v Larkin [2011] IEHC 549
Keelgrove Property Ltd v Shelbourne Development Ltd [2005] IEHC 238
Tracey Enterprises Macadam Ltd v Drury [2006] IEHC 381
Leigh v Jack (1879) 5 Ex D 264 Buckinghamshire County Council v Moran [1990] Ch 623
Cork Corporation v Lynch [1995] 2 ILRM 598
Durack Manufacturing Ltd v Considine [1987] IR 677
Dundalk UDC v Conway Unreported High Court , 15 December 1987
Doyle v. O’Neill (Unreported, 13th January, 1995)
v Iarnrod Eireann [2007] IEHC 314, [2016] IESC 47.
A v C [2007] IEHC 120
Kelleher v Botany Weaving Mills Ltd [2008] IEHC 417
Dooley v Flaherty [2014] IEHC 528
Hamilton v ACC Loan Management [2016] IEHC 142
Udaras Eitliochta na hEireann v Monks [2017] IEHC 440