Amendments to the Registered Lands Law to address concerns over foreclosures in Cayman will be making their way to the Legislative Assembly near year’s end, Attorney General Samuel Bulgin said Thursday.

He made the comment as he responded to parliamentary questions raised by Bodden Town West MLA Chris Saunders, who sought an update on the 2018 discussion paper released by the Law Reform Commission entitled, ‘The Enforcement of Mortgage-type Security Over Real Estate: Is Reform of the Law necessary?

Bulgin, speaking in the Legislative Assembly, said the majority of the views taken by those who responded to the discussion paper were that while the sale of foreclosed residential properties requires “close scrutiny”, such sales are an inevitable feature of a free and functioning property market. They did not think that the law needed changes.

According to statistics from 2018 there were 67 forced sales concluded on homes, businesses and land plots in the Cayman Islands, which was down from 116 in 2015. Those sales figures, from the Cayman Islands Real Estate Brokers Association, include properties that have been on the market for several years.

Bulgin said the commission is doing the research and recommendations for “a more fair and transparent” mortgage process while seeking balance for all parties involved.

He said the commission at its 25 June meeting reviewed and discussed provisions of a draft Registered Lands amendment bill and has scheduled a meeting for 23 July “specifically to discuss further refinements to the draft bill”.

Bulgin said shortly after that meeting, the commission will finalise and approve the draft bill for public consultation.

The Attorney General outlined the proposed amendments to the law, which include a comprehensive pre-action protocol process that sets out several mandatory steps to be expected between lender and borrower before a lender can exercise the power of sale against a borrower.

This, he said, includes examining – in detail – all the circumstances of the borrower.

“The bill requires that the borrower obtain independent legal advice or other competent advice before committing to a loan,” he said.

Bulgin said the proposed bill will also require a lender to refrain from concluding any loan agreement, unless the lender has reasonable grounds to believe the borrower has been properly advised and understands the contractual obligations he or she was entering into.

“The bill identifies what constitutes a public auction and the procedures to ensure fairness in the sale of foreclosed properties at an auction,” he added.

Saunders questioned how the proposed provisions will protect customers who may fall victim to “unscrupulous” lenders as well as those who charge “crazy interest fees” on customers who fall into default.

He questioned how the proposed bill will also help customers to get around those fees.

Bulgin said once the provisions become law, “it will provide a transparent sort of framework” wherein lenders and borrowers would understand from the very outset the terms and contractual obligations as they relate to mortgages.

Opposition Leader Arden McLean questioned whether property disputes can be dealt with in the Summary Court as opposed to Grand Court, as it is involves a cost to the borrower.

Bulgin said they would factor McLean’s suggestion into the considerations for the amendments as well as speak with the Chief Justice on the issue as well.

Saunders also raised concern over the practice direction guidelines issued by the Chief Justice for foreclosure cases.

He questioned on what basis the court made that decision to streamline the process and whether it captured the spirit of the law, which was to make it difficult for people to lose their homes.

“The law reform commission is now looking at the issue and the hope is whatever inconsistencies or perceived unfairness there is in the system, [they] will be addressed as part of that exercise,” Bulgin said.

The Attorney General said it is hoped that at the end of the year they will have a bill that will be robustly debated by members of the house and “we can bring our own judgment and the expertise of others to bear on what should be reflected in an amended Registered Lands Law, as it relates to mortgages.”

View Thursday’s LA here:

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