NEW POWERS:THE DRAFT legislation includes an extensive range of new legal powers designed to help Nama complete its work with the minimum of litigation or fuss.
The Department of Finance describes these as “specific and proportionate”, using Nama’s ability to acquire compulsorily land to illustrate just what it means by this.
Under the Bill, Nama can apply to acquire compulsorily a piece of land in “certain specified circumstances”. These include a situation whereby the sale of an asset falling under Nama would be “materially impeded” if another piece of land were not acquired.
Compensation would apply according to existing compulsory purchase legislation and the order would proceed after Nama received permission in court.
According to the department, this provision would facilitate the resolution of “difficulties which would arise due to the creation or retention of so-called ‘ransom strips’.” These are described as portions of land which might be essential to a property’s development but which have been carved out of the main asset.
The draft legislation also allows for Nama to gain vesting powers, whereby the agency would be able to pursue any asset of a developer who is showing no sign of co-operating with its work.
An exception here would be a family home, where the home has not previously been detailed as security for a loan which has come under Nama’s auspices.
Where the principal private residence has been used as security, however, it will be fair game. Other assets such as, in the words of Minister for Finance Brian Lenihan, “bank shares and racehorses”, could also be targeted.
The department notes that a vesting order “will not allow the debtor to walk away from the loan”. Rather, the debt will remain due but Nama will be able, in the meantime, to develop the property in question to “enhance the return to the taxpayer”. A fire-sale could thus be avoided.
Nama will also be able to appoint a receiver to parties in default over a loan, just as a bank would.
Under the draft legislation, Nama can choose to become involved in litigation that has already been taken by a bank in relation to an asset now falling under the agency. The Bill notes, however, that the bank “would still be involved in a limited sense and they remain liable for certain costs”.
A key objective of the department at the moment is to avoid legal cases that could delay or impede Nama’s work. On this front, the agency will be empowered to deal with certain claims through damages rather than through battles over assets that could delay its work.
