Leases & Mortgages

Limitation Periods Rent

A six-year time limit applies to actions to recover arrears of rent. The same time limit applies in respect of arrears of a rentcharge. A rentcharge is a 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.

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. 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.

A person who takes possession of the rent wrongfully may bar the right of the person entitled to the rent, by adverse possession.

Squatting Against Landlord

Under the Statute of Limitations, a tenancy at will is deemed to be determined one year from the date of its commencement. In the absence of specific provisions, a tenancy at will might continue indefinitely, so that the adverse possession would never arise.  Possession cannot be adverse while rent is being paid.

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.

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.

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 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 owner of a lessee’s estate in the application for first registration.

Position of Mortgagee

Squatting rights would be valid against the mortgagee.  This applies whether the mortgagee is a fixed charge holder or a floating charge holder. A mortgagee or chargee’s right to take action for possession and sale is barred 12 years after the date on which repayment is due. On 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.

Where a mortgagee has been in possession for more than 12 years, neither the mortgagor nor any person who claims through him, may not redeem the mortgage.  The title of the mortgagor is extinguished.  This does not apply to a mortgagee who takes possession under a court order for possession, under the 2009 Land Law Reform Act.

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 of the right to receive the monies accrued.  It will depend on the wording of the deed, as to whether it falls due on demand or automatically on breach or otherwise.

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.