In November 2018, the Law Reform Commission published a Discussion Paper entitled "The Enforcement Of Mortgage-type Security Over Real Estate: Is Reform Of The Law Necessary?" which sought to consider whether reform of the law in relation to the enforcement of residential mortgages was necessary.
HSM is at the forefront of this discussion and its attorneys Huw Moses (Managing Partner), Sarah Allison (Partner) and Shula Sbarro (Associate) as well as other local attorneys have responded to the Law Reform Commission with an in-depth overview of the mortgage enforcement procedure in the Cayman Islands together with suggested amendments.
On 28 August 2020, the Law Reform Commission published Cayman'sRegistered Land (Amendment) Bill, 2020 for public review and comment. The consultation period ends on 16 October 2020.
Notably, the proposed amendments to the legislation would see the introduction of a "Lending and Pre-action Protocol" which aims to encourage greater pre-action engagement between the parties and ensure that both the lender and borrower act fairly and reasonably.
The proposed pre-lending requirements would place obligations upon the lender to: provide the borrower with a prescribed list of information regarding the terms of the contract and consequences of breach prior to the creation of a legal charge; urge the borrower to seek independent legal advice; require the borrower to sign a special acknowledgment regarding their understanding of s.64(1) of the Law; and provide the borrower with a 5 day right of cancellation after entering into the legal charge.
Prior to exercising its power of sale in respect of a residential dwelling, the proposed new amendments mandate that a lender must comply with the Pre-action Protocol requiring the lender to, inter alia, explore solutions to enable the borrower to remedy any default in light of their individual financial circumstances.
The Bill also codifies the procedure for valuing, marketing and selling a charged property which is not dissimilar to the current procedure laid down by the Grand Court Practice Directions. Notably, there is an amendment to a lender's power of sale which permits a sale of the charged land by public auction, private treaty, Cayman Islands Real Estate Brokers Association (CIREBA) MLS or any other method prescribed by Cabinet.
The Bill introduces a statutory right to apply to the Court for directions including an Order for access but critically, there remains no right to possession until the lender has sold the property.
The Law Reform Commission invites the general public to make comment on the proposed Bill by forwarding submissions to the Director of the Law Reform Commission, 4th Floor Government Administration Building, Portfolio of Legal Affairs, 113 Elgin Avenue, George Town, Grand Cayman, P.O. Box 136, Grand Cayman, KY1-9000 either (1) electronically to jose.griffith@gov.ky or (2) in writing, by post or hand delivery by the deadline of 16 October 2020.
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