PART 1
March 2011
DEALING WITH A BANKRUPT’S PROPERTY IN THE REPUBLIC OF IRELAND (‘IRELAND’)
43.8.2 Law applicable to dealing with properties in Ireland as assets of the bankruptcy estate
The EC Regulation on Insolvency Proceedings 2000 (‘the EC Regulation’) (see Chapter 41) generally provides that the law applicable to the bankruptcy is that of the Member State in which the bankruptcy order was made [note 1] (see paragraph 41.51).
There are exceptions to this general rule, which exceptions include special provisions in the case of property. In particular, the opening of the proceedings does not affect third parties’ ‘rights in rem’ to property. ‘Rights in rem’ are the rights of a creditor or third party in respect of assets belonging to the debtor which are situated in another Member State at the time of the opening of the proceedings [note 2].
43.8.2a Registration and publication in Ireland of a notice of the order (inserted March 2012)
Irish law requires that, where a foreign insolvency administrator intends to take any action in Ireland, the insolvency order under which he/she is acting must be registered (see paragraph 43.8.25) with the Official Assignee in Dublin (see paragraph 43.8.27).
It will also be necessary to arrange for publication of the notice of the order) where the bankrupt has a (trading) establishment in Ireland (see paragraph 43.8.26).
Guidance on effecting such registration and/or publication is provided in Part 2.
43.8.3 Protection of the rights of chargeholders
As outlined at paragraph 43.8.2, the EC Regulation provides that ‘rights in rem’ are subject to an exception to the general rule regarding choice of law [note 3].
Broadly speaking, ‘rights in rem’ include security rights such as a mortgage, and the EC Regulation provides that it is the law of the country in which the property subject to security that would take precedence when considering the effect of the proceedings on those rights.
To comply with the EC Regulation the official receiver, in his/her capacity as trustee of the bankrupt’s estate, will have to follow Irish law when dealing with the rights of chargeholders.
43.8.4 Properties in Ireland as assets of the bankruptcy estate
The Act provides that property, wherever situated in the world, forms part of the bankruptcy estate [note 4] [note 5], and the Act gives the trustee a power of sale over the property [note 6].
It is clear, therefore, that property in Ireland belonging to the bankrupt would form part of the bankrupt’s estate and should be realised as appropriate, following the guidance in this Part.
43.8.5 Ensure that value of property justifies action taken to protect/realise
As with any other property, the official receiver, as trustee, should ensure that the value of the property to the estate justifies any action taken, or expense incurred, in relation to the protection or realisation of the property.
It is accepted that this may be something of a circular matter, in that it may be necessary to incur some expense to find out that the property has no value.
43.8.6 Ascertaining the value to the estate of a property in Ireland
In simple terms, the calculation of the value of a Irish property to the estate involves the same process as would be required for a property in England and Wales (that is, the value of the property less any secured charges). What may be more difficult is the obtaining of accurate information regarding the value of the property and the amount and level of any outstanding charges.
43.8.7 Obtaining information regarding the value of a property in Ireland from the bankrupt
The most likely source of information regarding the value of the property will be from the information or documentation provided by the bankrupt, for example:
43.8.8 Other sources of information regarding the value of a property in Ireland
As in the UK, there are websites that give the prices of properties that are for sale. Examples are given here:
It is possible that a local estate agent may be prepared to offer an opinion. An agent may be located by region on the following websites:
http://webcei.com/members.daft
43.8.9 Where accurate valuation of the property is required
Where it is necessary to obtain an accurate value of the property the official receiver, as trustee, may consider appointing a surveyor. As this service is likely to attract a fee the official receiver should consider the necessity of the valuation against the likely benefit to the estate. A surveyor may be located on the following website:
43.8.10 Establishing the position of charges against the property
It is likely that, as with an English/Welsh property, the official receiver, as trustee, will be able to establish what charges there are against the property from documentation or information provided by the bankrupt.
Assuming the identity of at least one of the secured chargeholders is known, a letter can be sent in the normal way (see paragraph 43.8.11) to obtain details of the amount outstanding under their charge and the identity of any other chargeholders. Such an approach should be accompanied by a completed data protection act disclosure authority (see paragraph 43.8.19) to avoid any refusal to provide information under jurisdictional differences.
43.8.11 Protecting the official receiver’s interest in the property
In the first instance, the official receiver, as trustee, should contact any chargeholder and request that they note the official receiver’s interest in the property (see paragraph 43.8.12).
In addition to informing the chargeholders of the making of the bankruptcy order, it will be necessary to register the official receiver’s interest in the property at the land register office (see paragraph 43.8.13).
43.8.12 Contacting the chargeholder (amended May 2012)
Annex 1 is an MP2 letter (seeking information from a chargeholder) that has been amended to be more relevant in respect of a Irish property.
Annex 2 is an MP3 letter for solely owned properties (requesting the chargeholder to note the official receiver’s interest in the property) that has been amended to be more specific in respect of a Irish property.
Annex 2a is an MP3 letter for jointly owned properties (requesting the chargeholder to note the official receiver’s interest in the property) that has been amended to be more specific in respect of a Irish property.
43.8.13 Protecting the property at the land registry (amended March 2012)
The official receiver should take steps to ensure that his/her interest in the property is recorded at the Irish national land registry (see paragraph 43.8.14). This will stop any unauthorised dealings in the property.
He/she can achieve this by registering a notice with the land registry that bankruptcy proceedings in England and Wales have commenced. This is provided for in the EC Regulation [note 7]. The registrar may charge a fee for registration.
Annex 3 is a letter that official receivers may use to effect such registration.
Land is registered at the Land Registry under provisions of Irish law [note 8] [note 9] [note 10]. It is possible to protect interests in jointly owned property by the registration of a caution [note 11], on Form 81 (Annex 4). This needs to be supported by an affidavit in Form 82 (Annex 5) in accordance with the relevant rules [note 12], and there is a fee of 25 Euros. It is not expected that official receivers would undertake registration of a caution as a matter of course but only where the value of the property warrants it.
It will be necessary to register notice of the bankruptcy in Ireland before any land registry notices can be entered (see paragraph 43.8.2a)
43.8.14 Registration of property at the land registry (amended March 2012)
Two parallel registries are maintained for the registration of property in Ireland; the Land Registry (Clárlann na Talún) (see paragraph 43.8.15) and the Registry of Deeds (Clárlann na Gníomhas) (see paragraph 43.8.16). Both systems are now under the control of the Property Registration Authority:
Property Registration Authority
Chancery Street
Dublin 7
REPUBLIC OF IRELAND
www.landregistry.ie/.../Land_Registry_Contact_Details.html
Land registration has not always been compulsory in Ireland and, consequently, not all land will appear on the register(s).
43.8.15 The Land Registry
The Land Registry (established in 1892 to provide a system of compulsory registration of title in the case of land bought out under the Land Purchase Acts) deals with the registration of all transactions (purchase, sale, mortgage, remortgage and other burdens) concerning registered land. The Register is arranged by counties, and each piece of land is given a folio number, under which all transactions pertaining to the land can be examined on request, after payment of a fee.
The Registry of Deeds (since 1708) has dealt with the voluntary registration of title deeds, mortgage documents and other documentation concerning unregistered land. The Registry does not retain these documents but does maintain one page summaries called "memorials" , which are stamped and filed by the registrar, detailing conveyancing and mortgage documents. The Registry endeavours to provide information concerning the deeds lodged against a certain property and the order in which they were lodged, such as the last named owner or the latest mortgage to be lodged, but no certificates or guarantees of title are issued.
43.8.17 Searching the land register
It is possible to inspect the ‘folio’ for a property (see paragraph 43.8.15) by postal application, using the prescribed form (http://www.landregistry.ie/eng/Forms/Land_Registry_Forms/) and on payment of fee (currently 6 Euros).
There is currently no on-line search facility without subscription.
43.8.18 Realising the interest in the property – transfer to the RTLU
As with a property in England and Wales, the official receiver, as trustee, may seek to transfer dealings in relation to the property to the appropriate RTLU as soon as possible after his/her interest in the property has been protected (see paragraph 43.8.11).
43.8.19 Realising the interest in the property
As outlined in paragraph 43.8.4, the Act gives the official receiver, as trustee, the power to take possession of and sell a property that forms part of a bankrupt’s estate [note 13]. Under the provisions of the EC Regulation [note 14] [note 15], however, the official receiver must have respect for domestic (Irish) law when taking steps to realise the interest in the property. In particular, he/she must follow rules in Irish law when taking steps to realise the interest in the property.
It is not expected that the official receiver should enter into such a procedure without expert guidance from a lawyer (probably based in Ireland) well versed in Irish law (see paragraph 43.8.20).
43.8.20 Instructing a local solicitor
It is not envisaged that the official receiver, as trustee, should attempt to deal with the sale of a property in Ireland directly, and it is recommended that local legal representation is obtained (see paragraph 43.8.21) to deal with the particular aspects of Irish conveyancing and insolvency procedures.
43.8.21 Locating a solicitor in Ireland
Solicitors engaged by the official receiver in this country may be able to recommend a solicitor in Ireland with which they have some connection or arrangement.
As an alternative, the Law Society of Ireland has a directory of Irish lawyers, that may be searched by region:
http://www.lawsociety.ie/Pages/Find-a-Firm/
43.8.22 Data protection (amended March 2012)
It may be the case that an Irish organisation from whom the official receiver seeks information will cite data protection as a reason for not providing the requested information.
In this case, the official receiver should have the bankrupt complete the data protection subject access form [note 16] and send that to the relevant organisation with a renewed request. The subject access form should be specifically addressed to the relevant organisation as some will not accept a ‘general’ authority.
For information, Irish organisations are allowed, under Irish law, to disclose personal data where such disclosure is required by or under any enactment or by a rule of law [note 17].
43.8.23 Disclaiming the property
The official receiver, as trustee, may issue a disclaimer of the property, but only if the property has some onerous obligation attached to it (such as an obligation to repair, maintain, make safe, insure for public liability or make secure) and, as a result, has no value to the estate.
Annex 6 is a document which explains the purpose and effect of a disclaimer, which should be included with the notice of disclaimer when served on interested parties.
See Chapter 34 for advice regarding the process of disclaiming.
43.8.24 Abandoning the property (amended July 2013)
Where there is no prospect of the property achieving equity sufficient to make realisation worthwhile, the official receiver, as trustee, may cease to take any active steps in dealing with the property – effectively, ‘abandoning’ the property to the mortgagees. Where the property’s value is affected by some onerous obligation (to insure or make the property safe, for example) a disclaimer would be the more appropriate course of action (see paragraph 43.8.23).
Where this position is apparent prior to the process of registering his/her interest at the Land Registry (see paragraph 43.6.13), the official receiver may discontinue that process. The official receiver should, though, ensure that his/her interest in noted by the mortgagees in the event of a surplus arising.