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Some years ago, facilities were granted to lending institutions by the Property Registration Authority (PRA) to register discharges of charges online – e-discharges. Under this system, the lender registers the discharge directly with the PRA. This is in contrast to the original system, which can still be used, where the lender furnishes a discharge in paper form and ultimately a solicitor (for example, for a purchaser) lodges it in the Land Registry.

When e-discharge should not be used

Difficulties have arisen in some sales by receivers (who transfer under a power of attorney contained in the relevant mortgage) and in sales by mortgagees (banks) on foot of their statutory power of sale where e-discharges have been registered in the Land Registry before the transfers to the purchasers have been lodged in the Land Registry for registration.

On the registration of the e-discharge, the charge is removed from the folio, and the Land Registry is of the view that the power of the receiver or of the bank to deal with the property is also removed. Accordingly, when the transfer from the receiver or the bank to the purchaser is subsequently lodged for registration, the Land Registry will decline to register the transfer. It may require an application to the Circuit Court or to the High Court to have the charge reinstated so that the transfer can be registered.

In an effort to ensure that this does not continue to occur, the Land Registry has now inserted into the e-discharge application a statement by which the applicant (the bank) confirms “that the registered charges are not the subject of a power of sale by the bank”. It is intended that this will remind lenders not to submit an application for an e-discharge where it is inappropriate to do so.

The committee recommends in cases where a contract for sale envisages that a property will be either transferred by a receiver as agent/attorney of the owner or by a mortgagee exercising its statutory power of sale that, in order to ensure that an e-discharge is not inadvertently lodged, the purchaser and vendor should ensure that the contract addresses the issue. A suggested wording would be:

“Where the Subject Property is to be transferred by a receiver acting as agent/attorney on foot of powers contained in a deed of charge then, to ensure that the power of the receiver remains in force until the purchase deed is lodged in the Property Registration Authority, the charge on the Subject Property will be discharged by means of a deed of discharge only and not by eDischarge.

If the mortgagee exercises its statutory power of sale and transfers as mortgagee, then the mortgagee will not lodge an eDischarge or furnish a deed of discharge as the charge will be discharged on registration of the transfer with the PRA pursuant to the provisions of section 62(10) of the Registration of Title Act 1964.”

When a discharge is not required

While a deed of discharge is required in the case of a sale by a receiver acting on foot of powers contained in a mortgage deed (in order to have the charge removed from the folio), no discharge of any type (either a paper discharge or an e-discharge) is required where a bank/mortgagee transfers pursuant to a statutory power of sale as mortgagee (by means of Form 24). This arises from the provisions of section 62(10) of the 1964 act, which is referred to in the second part of the draft special condition above.