Any person who obtains court judgment for a fixed sum may create a judgment mortgage on the debtor\’s property in the manner prescribed. The registration of a judgment mortgage creates a statutory mortgage over the interest of the judgment debtor in the lands concerned.
A judgment mortgage is created and registered by lodging an affidavit in the requisite form in the Land Registry or Registry of Deeds, depending on whether the land to be affected has registered unregistered title, respectively. The Circuit Court (Registration of Judgments) Act 1937 allowed judgments of the Circuit Court to be registered as judgment mortgages under the older legislation. Similarly, decrees of the District Court may be registered as judgment mortgages under the Courts Act of 1981.
A joint and several judgment against two or more persons may be registered against the separate property of any one of them. This may be done in single judgment mortgage affidavit.
The general presumption is that a creditor does not, by agreeing to payment in instalments or agreeing to accept a smaller sum, preclude himself from registering a judgment mortgage for the smaller sum where appropriate, without taking proceedings to enforce the amount due in the event of failure to pay an instalment. The position will be determined by the terms of the agreement.
A judgment may be registered against any real property (land/land and buildings) in which the judgment debtor has a legal or beneficial interest or has any power of disposition, which he may exercise for his benefit.
Pre-2009 Act Requirements
The requirements of the older 1850 legislation, in particular with reference to unregistered title land, give rise to a good deal of litigation on the occasion of enforcement. The requirements for registration were interpreted strictly and an affidavit might be deemed invalid and ineffective if it did not contain the precise requisite details. Not surprisingly, judgment debtors sought to rely on any apparent failures of compliance in order prevent the grant of a well charging order and order for sale. There was no jurisdiction in those proceedings, to rectify errors in the affidavit.
The pre-2009 legislation required details of the title of the action, the last known place of abode of the parties, title, trade or profession of the parties, the location of the land to be mortgaged, giving the county or barony or town and part (or Land Registry folio) number, amount of the debt or damages, date, a statement that the person against whom judgment is sought had an interest, the power of disposition over the lands in question. The omission of any of the requirements was fatal to the validity of the judgment mortgage.
In unregistered title cases (Registry of Deeds), the old civil parish or barony was required to be set out. The Baronies were ancient divisions of counties, most of which have fallen into disuse. The parish refers to the historical established Church (Church of Ireland) parish. An improperly registered judgment mortgage was void against subsequent mortgagees and other registered judgments.
A pre-2009 Act affidavit was required to state the title, trade or profession of the party. A misdescription of a person, trade or business was sufficient to invalidate the judgment mortgage. Where the debtor did not have a definite trade or profession, the description gentlemen, gentlewomen or widow might be used. If a person had a trade or profession, a description with reference to marital status did not suffice. In such cases, it was sometimes e possible to rectify the matter by an amending memorandum of registration.
The judgment mortgage must set out the amount of the debt and costs. Third parties are entitled to know the highest amount charged. The particulars must identify the identify the parties including, in particular, the judgment debtor concerned. It should enable him and others clearly distinguish himself from other persons of the same or similar names.
As accurate a description as possible of the lands concerned was and is required. The registration was not invalidated by addition of unnecessary or even erroneous descriptive details nor by a marginal inaccuracy in the amount of lands referred to. The omission of the county, barony or parish same where required, invalidated the affidavit. Reference to a non-existing parish or barony invalidated the affidavit. In case of the registered land, a reference to the folio number suffices.
Post-2009 Act Requirements
A model form of affidavit to create a judgment mortgage has been prescribed under the 2009 Act. Broadly speaking, its requirements are less onerous.
The affidavit must be sworn by the judgment creditor or certain persons who have been authorised. It must be sworn by the secretary of a company in the case of a corporate judgment creditor.
In the case of a company, the judgment creditor in addition to registering in the appropriate registry was required prior to the 2009 Act, to cause, copies of the affidavit, certified by the appropriate registry, to be delivered to the company within 21 days. The company was then required within three days to deliver a copy to the Companies Registration Office.
The Land Registry or Registry of Deeds was also to deliver a copy of the affidavit to the CRO. Default by the judgment creditor is an offence. Default by the company officer or by the company in making the filing is also an offence. However, the judgment mortgage is not invalidated.
Under the Companies Act 2014 (from 1st June 2015), if judgment is recovered against a company and that judgment is subsequently converted into a judgment mortgage affecting any property of the company, the judgment mortgage shall be void against the liquidator and any creditor of the company unless the procedure set out below is complied with. This provision does not apply to any judgment mortgage created before the commencement of the legislation.
The procedure for registration consists of the taking of steps so that there is received by the Registrar, together with the relevant judgment mortgage document, the prescribed particulars, in the prescribed form, of the judgment mortgage, not later than 21 days after the following date. That date is the date on which notification by the Property Registration Authority of the judgment mortgage\’s creation is received by the judgment creditor.
It is be presumed, until the contrary is proved, that the judgment creditor received notification, of the judgment mortgage\’s creation, from the Property Registration Authority on the third day after the date on which that notification is sent by it to the judgment creditor or his or her agent.
The registration of a judgment mortgage operates to transfer and vest in the creditor the unregistered lands referred to in the affidavit for all the estate right and title of the debtor in them at the time of registration whether at law or in equity. It includes interest which he might at such time create by virtue or any disposal power which he might have in them, which without the assent of any other party, may be exercised for his own benefit.
In the case of a registered title, registration creates a charge. It is equivalent in certain respects to a registered charge granted to secure loan monies. Unlike an ordinary charge, it is deemed not to be given for value, from which it follows that it does have priority over prior unregistered transfers and charge for value. See generally the sections on Land Registry charges and the distinction between them and mortgage over unregistered title land.
Effect of Judgement Mortgage
The creditor is in the same position as a mortgagee by deed. The judgment mortgage attaches to the judgment debtor’s beneficial interest only. If the property has been sold and no transfer has been registered, then there was nothing to which to attach. If a contract for the sale of the property has been entered, then the beneficial interest passes by operation of law notwithstanding that the purchase price has not yet been paid.
The registration does not bind after-acquired land. It is limited to the interest of the judgment debtor/judgment mortgagee at the date of registration.
A judgment mortgagee may transfer or convey his interest in the property to a third party. He may grant sub-mortgagor’s interest under the mortgage to a third party.
The registration of a judgment mortgage against a joint tenant of unregistered title land caused the severance of a joint tenancy before the 2009 Act reforms. Registration of a judgment mortgage in respect of registered land creates a burden on the registered title and did not cause severance. The 2009 reforms provide that registration of a judgment mortgage after ist December 2009 does not sever the joint tenancy. However the holder may apply to court for an order of sale.
The registration of a judgment mortgage against a family home does not require the consent of the non-owning spouse. It has been held that the judgment mortgage is a process of execution and not a mortgage granted by the other spouse. Accordingly, there is no disposition by a spouse, to which to consent.
The registration of a judgment mortgage against the interest of co-owner after the 2009 Act attaches to the interest of the co-owner. The 2009 Act grants the judgment mortgagee a right to apply to the court for an order for sale. The court has a broad discretion in relation to the grant or refusal of an order for sale. See the sections on co-ownership, partition and sale.
The judgment mortgage affects such interest as the judgment debtor has in the property. Accordingly, if the debtor\’s interest is subject to other interests, such as equitable interests (including unregistered transfer deeds and mortgages for value), the judgment mortgage takes effect, subject to them. Registration of a judgment mortgage gives the creditor rights and interests which have priority over those of persons whose rights or claims arising subsequent to the registration.
Registration does not give the judgment creditor the same status as a purchaser for value or a mortgagee for value.
Registration of a judgment mortgage against the title of a bare legal owner or trustee is ineffective, as there is no beneficial interest to which to attach. An improperly registered judgment mortgage is ineffective against subsequent mortgagees and also against intervening registered judgment mortgages.
It has been held that when a purchaser for value has knowledge of an incorrectly registered judgment mortgage but does not know that it remains unsatisfied, then he is not bound by it. However, it appears from case law that where the later mortgagee or purchase has actual knowledge that the judgment mortgage sum is outstanding, then he may be precluded from objecting to it.
It has been held that a judgment mortgagee may the right to marshal against a later judgment mortgagee. Therefore, when a mortgage affects two properties, a later judgment mortgages affect one of them only and a judgment mortgage affects them both, the first judgment mortgagee may marshal to the prejudice of the second mortgagee, once the first mortgagee has been satisfied.
Registration of a judgment mortgage on a registered title creates a burden, which is registered on Part III of the registered title in the usual way. The registration takes effect subject to existing registered burdens on the folio, section 72 burdens and unregistered rights subject to which a judgment debtor held the interest at the time of registration.
The creditor has the rights and remedies for enforcement as may be granted by order of the court.
The unregistered rights did not include the interest of a purchaser under sale contract who has not yet paid the full purchase monies. A judgment mortgage attaches to the beneficial interest of the vendor, which remains with him, even after he has received a deposit under the contract. The judgment mortgage might nonetheless be defeated on completion of the sale contract.
Even under this approach, a judgment mortgage of unregistered title land did not affect land contracted for sale, after the purchase money has been paid, as the seller had no remaining beneficiary interest in the land.
This position has been reversed by the Land and Conveyancing Law Reform Act 2009, by which a beneficial interest in property vests in the purchaser upon the sale contract taking effect. When the owner has contracted to transfer the land, before the judgment mortgage is registered, it will not now attach. If however, he contracts to transfer for voluntary consideration only, the judgment mortgage has priority.
Unless a judgment mortgage affidavit has been registered for three months prior to the date of adjudication of a judgment debtor as a bankrupt, then the judgment debtor does not obtain the benefit of a judgment mortgage. He has no security rights and ranks as an unsecured creditor only. Equivalent e provisions apply to judgment mortgages against companies, prior to their winding up.
As a judgment mortgage is not a transfer or mortgage for value, it is subject to a lis pendens with or without notice and irrespective or whether or not it has been registered. A lis pendens relating to registered land but not registered as a burden affects the interest acquired under the judgment mortgage.
A judgment mortgage is enforced by way of a declaration that the judgment debt sums are well charged on the debtor’s interest in the property. Under the usual practice, an order is made from payment of the money due immediately, with an order for sale in default. Proceedings may be brought in the High Court or Circuit Court.
A mortgage suit may seek a well charging declaration in relation to a mortgage (including a judgment mortgage) the sums due, an order for payment, a declaration that the payment may be enforced by sale, an order that an account be taken by the examiner or county registrar of money due, order appointing a receiver (if necessary) and an order for cost.
Where such order is made the court may grant carriage of proceedings to the creditor or another. Sale out of court under the auspices of the Examiner or County Registrar is usually ordered. Each significant step in the sale process is subject to the approval or oversight of the Examiner of County Registrar, as the case may be..
Upon completion of a sale, monies are lodged in court and a motion is brought for payment. An examination will be made of entitlements to the underlying interests. Advertisements may be ordered to be placed, seeking those who may have an interest in the land/proceeds of a sale.
The sale will be usually by public auction. The court may approve arrangements for sale out of court. The sale contract must be approved by court-appointed counsel.
Where premises are sold, the court will direct appropriate parties to join in and execute a proper conveyance of the premises. If they fail to do so, the court may authorise execution
A receiver may be appointed in a mortgage suit where it just appears unlikely that the proceeds will be paid at an early date. The order may be made where
- interest is due on the security there is at least a year’s arrears;
- where the property is in danger or jeopardy; or
- where there is a reason to apprehend that the sum for which the lands will be paid is insufficient to pay off charges and encumbrances.
If the monies due are paid so that the security of the judgment mortgage, is redeemed the judgment creditor must to execute a release of the judgment mortgage. There is provision for filing of a document in order formally to cancel a judgment mortgage. On the filing in the Registry of Deeds or Land Registry, as the case may be, the judgment mortgage is shown to be discharged on the Register or in the case of the Land Registry is removed entirely.