Icelandic legislator proposes changes to foreclosure laws

Ásthildur Lóa Þórhallsdóttir of the People's Party has proposed a new bill aimed at reforming foreclosure procedures in Iceland. The proposal seeks to establish a principle where, if a property being foreclosed upon is a primary residence and legal domicile, the sale should occur on the open market by default, unless the debtor specifically requests an auction.

Currently, the law allows for such requests, but data from the Ministry of Justice shows this has been rarely utilized; only eight such sales occurred on the open market between 2013 and 2023, compared to over 4,140 properties sold via auction. The bill aims to ensure debtors receive higher prices for their homes, potentially reducing their remaining debt burdens.