# BoSI may have a problem enforcing its mortgages



## Brendan Burgess (29 Mar 2015)

I don't fully understand this article in the Irish Times 

http://www.irishtimes.com/business/...ay-affect-bosi-distressed-mortgages-1.2157618
_
Comments by a [broken link removed] judge on a matter of law could have implications for many hundreds of distressed mortgages loaned by the former [broken link removed] (Ireland). 

...

In the course of her ruling in the recent case of Kavanagh versus McLoughlin, Ms [broken link removed] raised an issue surrounding the fact that Bank of Scotland (Ireland) remained the registered owner of charges over mortgaged properties even though it ceased to exist in 2010. 


The legal situation is the only way in which the charge on the property can be transferred to a new owner is through an application by the registered owner. But as Bank of Scotland (Ireland) ceased to exist as of December 31th, 2010, it raises the possibility there is no legal way that a transfer could be effected. _


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## Jim Stafford (30 Mar 2015)

The Property Registration Authority have now updated their website with the following notice:

*Bank of Scotland (Ireland) Limited – Legal Office Notice No. 2 of 2014*
By Deed of Transfer dated 1st July 2004 made between The Governor and Company of the Bank of Scotland (‘GCBS’) and Bank of Scotland (Ireland) Limited (‘BOSI’), GCBS assigned its portfolio of domestic Mortgages to BOSI. The Deed is filed in Instrument No. D2005PS002367T together with a schedule giving details of all the mortgagors, numbering approx. 14,000, but without folio details.
On the 17th September 2007 GCBS changed its name to Bank of Scotland plc (‘BOS’).
Pursuant to the European Communities (Cross Border Mergers) Regulations 2008, BOSI merged with BOS on the 31st December 2010, at 23.59 hours and all the assets of BOSI did vest in BOS.
BOSI was thereby dissolved.
Henceforth the following practices will apply:

Discharges by BOS of BOSI and GCBS charges will be acted upon and the relevant charge cancelled, as if the discharge was by BOSI or GCBS.
Charges dated on or after 1st January 2011 must be in the name of BOS.
Charges prior to 1st January 2011, in the name of BOSI, or prior to 17th September 2007, in the name of GCBS, may be registered in the name of BOS.
On application by BOS in any particular case, it may be registered in substitution for BOSI or GCBS as owner of individual charges, on payment of a fee of €40.
In any case where BOS intend to realise their security, in respect of a charge registered in the name of BOSI or GCBS, either by receiver’s sale or by exercising the power of sale of a mortgagee in possession, it should apply for registration as owner of such charge prior to lodgement of the transfer on sale of the property in realisation of the security. BOS must be registered as owner of a charge to exercise the powers of enforcing such charge.
Legal Office Notice 2 of 2005 and Legal Office Notice 1 of 2011 are now rescinded.
*Fergus Hayden
Deputy Registrar*
23 May 2014
Revised 23 March 2015


Jim Stafford


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## Gerry Canning (30 Mar 2015)

I understood most Mortgages/Loans were in the name of (Bank of Scotland Ire )ie BOSI.

Query/clarity on point 5.


For BOSI Mortgages/Loans to be enforced

BOSI must on wishing enforcement have the Legal Charge on the Mortgage transferred over to BOS before sale can take place.

Does that mean BOS must register transfer of Charge from BOSI before sale?
Or is it just a tidying up action after sale?


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## Jim Stafford (30 Mar 2015)

Gerry

It is clear that BOS must register ownership of the charge before any Receiver sells a charged property.

Some commentators are suggesting that BOSI must make the initial application to transfer the charge. (If this was the case then BOS could have have difficulties.)

However, the Supreme Court has clearly ruled that the BOSI charges are the property of BOS. It is just that they are not registered as owners at the Property Registration Authority.

The Property Registration Authority appear to be taking a view that BOS may pay €40 to register each charge into its own name.

Having said all the above, there is very complex legislation and rules involved!

In the light of the Supreme Court decision, there must be issues over any receivership sales since 1 January 2011 since the Receiver might not have had the authority to sell if BOS did not have the charge registered in its own name at the time of sale.  The Property Registration Authority will probably take steps to formalise such sales.

Jim Stafford


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## Gerry Canning (30 Mar 2015)

Jim,

Thanks for your clear and prompt response.

Your answer is what my (notion) was, but its good for this (novice), to get someone like you , who knows the issues, to give me some clarity..


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## advice (31 Mar 2015)

e the Property Registration Authority interpreting the Laffoy decision incorrectly, as in notice 2/2014 (as amended in March 2015), they are allowing BOS to transfer the charge from BOSI to BOS for a simple fee of 40 euro. BOS may own the property of BOSI but that does not neccessarily make them registered owners of the charges. BOSI appear to be the defacto registered owners of the charges in the PRA and under section 64 of the Registration of Titles Act 1964 it is only the registered owner of the charge that can convey same, whether internally between different company entities or externally to third parties. In other words BOSI should have transfered the various charges on its books to BOS in the PRA prior to vesting all assets in BOS under the Cross Border Merger.

Also in section 64 of the Registration of Titles Act 1964 there may be another problem, if the PRA are deemed to be legally correct in their assumptions, as technically, no conveyance by deed has actually occurred within the meaning of the Conveyancing Acts. 

  Also Jim what is the position with regard to perfection of charge in relation to BOS loans already sold on to vulture funds like Lone Star and Tanager ?


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## Jim Stafford (1 Apr 2015)

As the PRA have taken the view that BOS own all of BOSI charges, they do not see an issue with BOS registering their ownership of the charges. 

BOS might have an issue with paying €560,000 (i.e. 14,000 mortgages at €40 each!) when the Supreme Court has ruled that they do own the mortgages.

Having spoken with several solicitors, the loans sold to Tanager and others should be OK, on the basis that BOS did own the loans etc.   Indeed, I understand that the funds have already registered their ownership of the charges at PRA already. However, as I stated above, there is very complex legislation and technical rules involved!

Jim Stafford


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## Raging Bull (1 Apr 2015)

Basically the only entity that can force a repossesion is the entity that has the motgage deed. If that entity no longer exists no other person or entity has locus standi to enforce repossesion


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## advice (1 Apr 2015)

To Jim,

Raging Bull has a valid point, I have spoken with both a junior and senior counsel today about this issue. It raises complex legal technicalities. I believe these legal problems were averred to by Justice Laffoy's comments with regard to her judgment. Firstly lets us look at legal perfection. Perfection relates to the additional steps required to be taken in relation to a security interest in order to make it effective against another party. Both counsels agreed that if the vulture funds have already registered the charges with the PRA there may be a problem for them in enforcing these charges as the perfection of the charges is broken. In other words the transfer of the registered charge will read BOSI to Tanager or Lone Star, as the case may be, on such a date. However this transfer could never have happened in reality, as, at the transfer time, BOSI did not exist, thus making the registration of charges imperfect. If there is imperfection then there is a real problem seeking enforcment of the charge. This will undoubtable come before the Appeals Court or indeed the Supreme Court during some future litigation.

Next moving on to BOSI legal notice 2/2014 as amended in March 2015. The deed is filed in the above instrument d*********  giving a schedule of mortgages, but importantly excluding the relevant folio numbers. Now looking up the PRA's own form 17 for transfer of a property, it states that the relevant folio number must be filled in. This is a requirement in Irish Law, statutory instrument 456/2009 refers. The PRA has covered itself from litigation as it has a disclaimer stating that they are not an advisory body and will not be liable for any inaccuracies, ommissions or errors. From studying Justice Laffoy's Judgment, the Registration of Titles Act 1964, and the PRA own rules I believe that Fergus Hayden's interpretation of the rules is flawed and open to legal challenge. Basically, its a legal quagmire of BOS's own making. Accurate detailed registration of charges is an essential element in every large financial institution armoury, so as to protect it's securities.


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## Jim Stafford (1 Apr 2015)

I agree with you that it is complex, hence my caveat that there is "_very complex legislation and rules involved_".

I note your following comment:


advice said:


> However this transfer could never have happened in reality, as, at the transfer time, BOSI did not exist, thus making the registration of charges imperfect



The PRA would agree with you that BOSI did not exist at the "_transfer time_", but the reality is that the Supreme Court has ruled that BOS owned the charges "_at the transfer time." _ BOS sold the charges to the funds, so the funds were entitled to register their ownership at PRA.

The issue may well come before the courts again in order to clarify matters.

Jim Stafford


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## advice (3 Apr 2015)

Jim,
I have spoken to some other legal eagles in relation to perfection of charge, they are of the belief that it cannot be backdated to facilitate errors, so Justice Laffoy's judgment does create quite a legal 
quandary that only the Courts will be able to sort out. I have to point out the PRA have been wrong on their interpretation of legal requirements of registration procedures on more than one occasion


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## advice (7 Apr 2015)

Jim,

Look at section 64 Registration of Title Act 1964, in particular look at section 64(1) which states - "The registered owner of a charge may transfer the charge to another person as owner thereof and the transferee shall be registered as owner of the charge" BOSI are the registered owner, not BOS, hence the legal quagmire. What the PRA are doing is trying to circumvent this section of an Act of the Oireachtas with an amendment to legal notice 2/2014. No person or body can lawfully do this. Even the Courts can only interpret legislation, not alter it. That is the whole point of the Dail. It's called democracy ( separation of powers ).


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## Piggybank (13 Apr 2015)

To whom it may concern,

I have looked in detail at the Supreme Courts decision and I concur with Justice Laffoys views on the matter, however while I am a big fan of Justice Clarke, I have studied his Judgment on the matter, which extends into matters that Justice Laffoy quite rightly avoided and I am afraid that I cannot agree with Justice Clarke's interpretation of the law regarding the European Communities ( Cross Border Mergers ) Regulations 2008. SI 157/2008 refer.This is based on European Directive 2005/56/EC. This article should be of paramount importance to The McLaughlins.

Firstly let us visit Justice Clarke's Judgment with regard to Assets and Cross Border Merger, in particular to paragraph 6.6. Justice Clarke quotes what a merger by absorption is defined as under European Directive 2005/56/EC. He quotes Article 2(2)(c) which states " A company, on being dissolved without going into liquidation, transfers all its assets and liabilities to the company holding all the securities and shares representing irs capital. " Justice Clarke states " In this case, BOSI was, by virtue of the court orders to which I have referred, dissolved without going into liquidation and it follows that all of its assets and liabilities were to be thus transferred. He does not mention " TO THE COMPANY HOLDING ALL THE SECURITIES OR SHARES REPRESENTING ITS CAPITAL."  This oversight of Justice Clarke is extremely important as it forms the basis for his subsequent judgment with regard to assets and Cross Border Merger, which due to this oversight I believe to be flawed.

It is without doubt that BOSI did transfer all its assets and liabilities to BOS at 11.59pm on the 31st December 2010. However BOS was not at this time the holder of BOSI's securities as they were still registered in BOSI name in the Property Registration Authority. Therefore the merger of BOSI into BOS is flawed as of from the date of absorption. The said merger did not meet the requirments of a cross border merger as defined in EU Directive 2005/56/eu as transposed into Irish Law utilising SI 157/2008, Article 2 (2)(c) refers. The securities of BOSI had not been transferred to BOS, so BOS was, at the time of transfer of all assets and liabilities, not holding the securities of BOSI. Holding securities in this context means having ownership of the securities with the ability to enforce and resell same. This would be the intention of the directive.

Justice Clarke immediately moves onto article 14 of European directive 2005/56/EU , this deals with the assets and liabilities of the companies but NOT the securities. Justice Clarke should have quoted Article 4 of the said Directive. Article 4 (1)(b) states " a company taking part in a cross border merger shall comply with the provisions and formalities of the National law to which they are subject. BOSI did not adhere to these formalities ie they failed to transfer ownership of the securities as set out in an Act of the Oireachtas; section 62/64 of the registration ot Titles Act 1964 refer. Article 4(2) states " The provision and formalities referred to in paragraph (1)(b) shall, in particular, include those concerning the decision making process relating to the merger and, taking into account the cross border nature of the merger, the protection of creditors of the merging companies, debentures holders and the holders of SECURITIES or shares......" In other words, in relation to securities, these matters must be attended to, before the transfer of assets and liabilities takes place, not afterwards as is what has happened.

In relation to Article 14 (3) this clause deals with the laws of Member States which require the completion of special formalities before the transfer of certain assets, rights and obligation by the merging companies become effective against third parties, those formalities shall be carried out by the company resulting from the cross border merger. This clause makes no mention of securities  while Articles 2 and 4 refer specifically to same.

The main thrust of this post is that the merger of BOSI with BOS was flawed as it did not comply with the definition of a cross border merger as set out in article 2(2)(c) of European Directive 2005/65/EC.


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## Jim Stafford (13 Apr 2015)

To Piggybank

Article 2 of the Directive gives 3 meanings to a merger as follows:

2. ‘merger’ means an operation whereby:
(a) one or more companies, on being dissolved without
going into liquidation, transfer all their assets and
liabilities to another existing company, the acquiring
company, in exchange for the issue to their
members of securities or shares representing the
capital of that other company and, if applicable, a
cash payment not exceeding 10 % of the nominal
value, or, in the absence of a nominal value, of the
accounting par value of those *securities or shares*;
or
(b) two or more companies, on being dissolved without
going into liquidation, transfer all their assets and
liabilities to a company that they form, the new
company, in exchange for the issue to their
members of securities or shares representing the
capital of that new company and, if applicable, a
cash payment not exceeding 10 % of the nominal
value, or in the absence of a nominal value, of the
accounting par value of those *securities or shares*;
or
(c) a company, on being dissolved without going into
liquidation, transfers all its assets and liabilities to
the company holding all the* securities or shares
representing its capital.*

Are you confusing "_*securities or shares representing its capital*_" with "securities" registered at the PRA?  The actual shareholdings (i.e. securities or shares) in BOSI itself would not have been registered at the PRA, whereas the securities that BOSI held over property would be.

Jim Stafford


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## Piggybank (13 Apr 2015)

To Jim,

Securities representing a company's capital can be divided into debt equities and debt securities. Debt equities are usually common stock. Debt securities include government and corporate bonds,CDO's, CMO's, forwards, options, swaps, futures, banknotes,and of course, asset back securities. The trouble with the Cross Border Merger description of a merger by absorption as described in article 2(2)(c) of European directive 2005/56/EU is that it states " transfer all its assets and liabilities to the company holding ALL the SECURITIES or shares representing its capital." This obviously includes asset backed securities which would contribute to the company's overall capital position. So I reiterate that all securities registered with BOSI should have been transferred to BOS prior to the merger by absorption according to the terms of the directive. I agree with you that this is a complicated legal situation but the directive speaks for itself.


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## Brendan Grehan (15 Apr 2015)

Piggybank,

I think I get what you are saying, you are stating that Directive 2005/56/EC, article 2(2)(c) definition of a merger by absorption, which states  "a company, on being dissolved without going into liquidation, transfers all its assets and liabilities to the company holding all the securities or shares representing its capital." The Directive should have stated "to the company holding all the securities and shares representing it's share capital." but because it did not, you are obliged to include the company's  total capital, that being the sum of it's total shareholder equity and the sum of the company's long term debt (Which would include debentures and asset back securities, covered bonds, etc). These then, if possible, should have been transferred from BOSI and registered in BOS name, prior to the transfer of all BOSI assets and liabilities to BOS, so that that they are included in BOS's capital as per the definition of a merger pursuant to article 2(2)(c) of the European Directive on Cross Border Mergers. (ie to a company holding all the securities or shares representing its capital.) Very interesting point, if this is what you are alluding to.


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## Bronte (15 Apr 2015)

Jim Stafford said:


> Having said all the above, there is very complex legislation and rules involved!


 
Whether it's complex or not surely that is why the bank would have paid for the top legal advice that should have ensured everything was done correctly. 

Whose fault is it this is such a mess.


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## Justcurious (15 Apr 2015)

FYI

The Property Registration Authority received about 20,000 applications last week on behalf of Bank of Scotland Plc lodged by solicitors AC to transfer the names of all the charges on folios in the name of Bank of Scotland (Ireland) into the name of Bank of Scotland (PLC) and they are processing them.


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## advice (15 Apr 2015)

The PRA, on the advice of Department of Justice and Finance, are trying to rectify a terminal error in perfection of title, perpetrated solely by BOSI and BOS ( incidentally, one of the most aggressive bank to seek repossession orders against mortgage holders within this State.) I myself believe this action by the PRA and BOS is unlawful and will not stand up to legal scrutiny in the Courts. This error, along with the other errors in relation to the Cross Border Merger Directive as posted, will make it legally very hard for BOS to attain possession orders on defaulting mortgagors. What the PRA are doing is bringing the whole registration of title process into disrepute. Why are they only charging 40 euro per mortgage while you and I have to pay 175 euro? Why is there no folio attached to each re registration of mortgage, as would be required if an ordinary citizen was transferring title from one member of his family to another ?


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## Brendan Grehan (15 Apr 2015)

A classic three card trick


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## Justcurious (15 Apr 2015)

Advice,

Just to be clear .... they are changing each charge on each folio from BOSI to BOS. One folio I am aware of was changed in the last few days.


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## las66 (16 Apr 2015)

Justcurious said:


> Advice,
> 
> Just to be clear .... they are changing each charge on each folio from BOSI to BOS. One folio I am aware of was changed in the last few days.


Hi,
I got a copy of our folio a few weeks back and the charge was BOS Ireland and straight to Tanager in 2014?? How can BOS plc change this legally??


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## Raging Bull (16 Apr 2015)

las66 said:


> Hi,
> I got a copy of our folio a few weeks back and the charge was BOS Ireland and straight to Tanager in 2014?? How can BOS plc change this legally??




Simply its probably not legal...you would have to give consent I'd imagine similar to how a securitization process works

There's law for the plebs and a law for the banks !!


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## Ron (15 May 2015)

Tracker with BOSI 2007 - 30 year interest only

Checked the Land registry today.

The title was changed on the 09th April 2015 to this

"The title to this charge was transferred by virtue of a cross border merger made in accordance with Directive 2005/56/EC of the European Parliament and of the Council that was approved by order of The Court of Session of Scotland to take effect at 23:59 hours GMT on 31st December 2010. See entry no. 5 below.

BANK OF SCOTLAND PLC is owner of the charge at entry no. 4 above. "

Any thoughts?


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## Andy836 (15 May 2015)

Ron said:


> Tracker with BOSI 2007 - 30 year interest only
> 
> Checked the Land registry today.
> 
> ...



The Irish Times article March 29, 2015 (linked below) discusses this. 
http://www.irishtimes.com/business/...ay-affect-bosi-distressed-mortgages-1.2157618

While most of the article deals with the potential repercussions should things not be fixed (i.e. the big bad hedge fund/banks will take a bath) it gives only 1 sentence to what I think is the most important part - A Dept of Finance response to the judge's comments, noting the PRA had subsequently amended its administrative decisions in light of Laffoy's comments and as such no legislative implications would arise (i.e. the PRA fixed the loan owners problem and didn't need the government to pass legislation). That was on March 29th so the change you saw on April 9th possibly reflected that - the transfer of the charge from Bank of Scotland (Ireland) Limited to Bank of Scotland PLC.

Furthermore, if my reading of this is correct, should the mortgage issue not have been fixed, the implications would be to make the loan unsecured. As such, the Bank could still seek possession of the underlying home but it would be a longer and more expensive process - i.e. the borrower would default, the loan owner would demand full repayment of the loan, full repayment was not forthcoming, the Lender would seek a judgement in the courts, they would then seek possession of the debtor's assets - the problem for the Lender would be the risk of recovery being diluted by other debts (credit card, revenue etc).

I could be completly wrong though. LOL.


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## las66 (15 May 2015)

Ron said:


> interesting Gerry thanks
> 
> its with lonestar now.
> 
> ...


I am surprised if your loan was transferred to loanstar that they were not already the charge on your folio? Ours was not changed to BOS PLC it just went straight from BOS Ireland to Tanager!!


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## advice (19 May 2015)

to Ias 66,

your copy of the Folio displays what is called "imperfection of title" since it reads Bank of Scotland ( Ireland ) to tanager in 2014. We all know that Bank of Scotland ( Ireland ) ceased to exist in 2010; therefore the charge could not have been transferred between these two entities in 2014. So does Tanager actual have a valid charge over your property ? Interesting isn't it !


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## advice (19 May 2015)

Keep the folio you have safe, it is gold dust ! If you go to conversation mode I will talk to you about the above


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## Tom2458 (29 Jul 2015)

Hi Folks, Most of what you guys are saying is going over my head! I have a few questions if anyone can help.

I have a Bank of Scotland tracker mortgage since 2006-2007. I have a letter from BOS telling me the mortgage has been transferred to Lonestar. I also have a letter from Start telling me that they are the new owners on my account. 

My question is as follows: 

Can I conduct a sale of the property today, considering all the mess with regard to title between the various parties?

Can BOS (or who ever now owns my mortgage account) force me out of the property for non payment of my mortgage?

Suppose the new owners of my mortgage offer me a write off on a portion of my mortgage and agree to allow a sale for a figure less that the amount owing, will this sale be possible to get over the line considering the issues with title?


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## 44brendan (29 Jul 2015)

Tom2458 said:


> Suppose the new owners of my mortgage offer me a write off on a portion of my mortgage and agree to allow a sale for a figure less that the amount owing, will this sale be possible to get over the line considering the issues with title?


There are no issues with the title. the issues raised are in respect of the ownership of the charge on the property. As BoSI is no longer a legal entity the charge should now vest in the ownership of Lonestar (this appears to be where the uncertainty lies). Lonestar should have the capacity to vacate this charge as owners of the charge. However, given the comments above re uncertainty over the legality of transfer of charge ownership this appears to be unclear. I.e. Will a purchasers solicitor accept a vacate from Lonestar? This is the issue that needs to be clarified


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## Tom2458 (29 Jul 2015)

So really this property cannot be sold until this mess is sorted. I cant see any purchasers solicitor accepting the transfer of ownership considering the uncertainty.


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## Asphyxia (29 Jul 2015)

I agree, the issue is essentially one of the ownership of the charge. The PRAI in notice 2/2014 are trying to retrospectively allow for a change of ownership, contrary to statutory rules which was originally legislated for in the Registration of Titles Act 1964/2006. This action of the PRAI, although probably common sense, can definitely be challenged in court as unconstitutional. There is also the European Law aspect of legitimate expectation which is a corner stone principal of European law. The action of the PRAI could be considered to be a breach of this principle and thus unlawful. The whole situation is quite a complicated legal mess.


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## Sarenco (28 Oct 2015)

Bronte said:


> Still don't get it.  What's it for.  Have you one to show us please.



Pretty much every mortgage deed contains an irrevocable power of attorney in favour of the mortgagee (lender).  This is to further empower the mortgagee (or any receiver appointed by the mortgagee) to execute documents in respect of, and otherwise to deal with, the secured property in accordance with the powers granted under the mortgage.

The power of attorney cannot be revoked as long as the mortgage remains in place.  However, if for any reason the mortgage is found to be invalid then the power of attorney granted thereunder will also be invalid.

I have never seen a home loan agreement (as opposed to a mortgage deed) that contains a power of attorney.

I would be very wary of any claims made by or on behalf of Mr Gilroy and his merry band of Freemen.


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## Asphyxia (28 Oct 2015)

Bronte said:


> Me too.
> 
> In relation to this:
> 
> ...



You are correct Bronte, the POA is included, as Sarenco states, within the mortgage deed. The loan agreement and mortgage deed are usually attached together and sent to the borrower by financial institutions who bother to comply with statutory legislation, that being section 130(a) of the Consumer Credit Act 1995, but hey it they don't bother, nothing happens. Great little Country we live in.


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## Sarenco (28 Oct 2015)

Bronte said:


> But at the end of all this how has the borrower or Gilboy won anything, presumably they have merely delayed the inevitable and the ACC bank will have moved to validly appoint a receiver correctly.



That's it in a nutshell.  Pretty much the definition of a pyrrhic victory.

To recover damages you have to demonstrate loss.


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## Brendan Burgess (2 Nov 2015)

Folks

Off topic and personalised attacks have been deleted. 

Brendan


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