Solicitors' system works, says AIB chief

AIB chief executive Eugene Sheehy said yesterday the bank has not seen any evidence of problems with the vast majority of mortgages provided on the foot of solicitors' undertakings.

He said the Law Society and the Irish Banking Federation were working to resolve the issues with solicitors' undertakings that have emerged in the cases of Dublin-based solicitors Michael Lynn and Thomas Byrne. They took out double mortgages with several financial institutions on the same properties.

"We don't see systemic issues here," said Mr Sheehy. "We see them as one or two instances that can easily be managed. There is quite a deal of efficiency in the system for the consumer with the way the banks and the law profession have operated over the years, and you don't want to throw the baby out with the bath water and introduce all sorts of new costs and delays."

The High Court has heard that Mr Lynn and Mr Byrne used solicitors' undertakings to take out multiple mortgages on the same properties with a number of lenders.

Solicitors' undertakings speed up residential property transactions by allowing the deals to be completed on guarantees from solicitors that they will check title deeds and register a lender's charge after the loan has been drawn down by the purchaser.

AIB secured a court order in the Commercial Court on Tuesday directing Mr Lynn to repay €6.865 million lent to the solicitor and property developer.

Banks and financial institutions are reviewing lending practices and loans provided to solicitors on foot of undertakings since the Lynn and Byrne cases emerged in the courts last month.

"We have relationships with hundreds and hundreds of solicitors around the country. The overwhelming experience is positive and professional," said Mr Sheehy.

He said solicitors' undertakings worked 99.99 per cent of the time and were essential for the buying and selling of residential properties. He said he had seen no evidence of similar cases.

"There is certainly nothing to add to what has already come out," added Mr Sheehy, who spoke to The Irish Times before the Small Firms Association's annual lunch in Dublin yesterday.

Addressing the lunch guests, Mr Sheehy said negative commentary within Ireland was causing concern about the future of the country among international investors. He said the bank was trying to "counterbalance" the negative sentiment at home during its meetings with overseas institutions.

He said the best informed commentator on the economy was the Central Bank, which has provided a satisfactory outlook. Citing the Central Bank, Mr Sheehy said the country continues to perform solidly.