MORTGAGES

Question 1

Mortgage definition

Answer 1

A mortgage is a charge over an estate or interest in land, with the purpose of securing an obligation to pay money

Question 2

What/who is a mortgagee?

Answer 2

A mortgagee is a person LENDING the money

Question 3

Who/What is a mortgagor?

Answer 3

The person who is charged with a mortgage - The BORROWER

Question 4

What are the three types of mortgages?

Answer 4

Fixed Sum Mortgage, All obligations mortgage, subsequent mortgage.

Question 5

What is a fixed-sum mortgage?

Answer 5

A mortgage specifies the amount secured and all of the terms and conditions of the loan.

Question 6

What is an all-obligations mortgage?

Answer 6

Secures loan repayment obligations that are separated in a SEPARATE loan agreement.

Question 7

What is a subsequent mortgage?

Answer 7

the mortgagor can sign mortgage agreements with multiple mortgagees.

Legal (Registered) mortgages have priority over equitable (unregistered mortgages). Earlier in time have priority.

Each may stipulate a priority limit to recover up to on the case of a default.

Question 8

What are the three essential elements of a mortgage?

Answer 8

Descriptive Contractual and Operative
DCO.

Question 9

What are the three necessary descriptive elements in a mortgage?

Answer 9

Specify the land/interest to be mortgaged, the name of the mortgagee and mortgagor, and the nature of the debt secured by the mortgage (interest rates and principal).

The last two are optional but need to be expressly stated in the agreement if you want them to apply.

Question 10

What does the contractual element set out in a mortgage?

Answer 10

Set out what is to be paid and the terms governing the parties. The most important is the covenant to pay.

Question 11

Does registering the mortgage create an obligation to pay?

Answer 11

NO, registering the mortgage agreement only creates a charge. The mortgage agreement MUST include the operative charging clause.

Question 12

What if there is no operative charging clause in a registered mortgage?

Answer 12

The charge is created by the act of registration, but if the mortgage is missing an operative clause, the registration of the mortgage will cause it to only become a charge upon the land.

Question 13

What if there is no operative charging clause in an unregistered mortgage?

Answer 13

there will be no charge, and the mortgage will not secure the mortgaged property if the mortgagor defaults.

Question 14

Registered or Unregistered?
_____ is created on registration, and are indefeasible even if the mortgage instrument is void (except in the case of LT Fraud or manifest injustice).

Answer 14

Registered Mortgage

Question 15

True or false?
The mortgagor is not obliged to pay the mortgagee anything unless the mortgage agreement incorporates a covenant to pay.

Answer 15

true

Question 16

What does indefeasibility protect?

Answer 16

The registered mortgage agreement and any registered documents

Question 17

Are unregistered covenants (Such as the covenant to pay) protected by indefeasibility?

Answer 17

Not necessarily. depends on whether the covenant to pay was properly incorporated into the registered documents.

if the loan agreement is incorporated, the indefeasible charge on the mortgage secures in the land an obligation to pay.

Question 18

Was the loan incorporated in Westpac v Clark?

Answer 18

Yes, however it is a NON existent loan agreement as the REAL ms Fenech does not have a loan with westpac. The covenant to pay is therefore indefeasible, but SECURES NOTHING.

Question 19

If the loan agreement had been incorporated, how many possible outcomes were established of its effect?

Answer 19

Three outcomes

Question 20

Which was the favoured of the three outcomes in Westpac v Clark?

Answer 20

Registration has the effect of validating an otherwise invalid mortgage, but only to the extent necessary to enable the exercise of security.

Question 21

Registration has the effect of validating an otherwise invalid mortgage, but only to the extent necessary to enable the exercise of security – Allows what?

Answer 21

This view would have allowed Westpac to sell Fenech’s property, but not sue the real ms fenech personally if the sale did not cover the full amount outstanding.

Question 22

What is “Redemption”?

Answer 22

When the mortgagor repays the loan in full and the mortgagee no longer has a claim to the property.

Question 23

Who governs oppressive interest rates and can it be contracted out of?

Answer 23

CCFA, No.

Question 24

What is Early redemption and what is the requirement?

Answer 24

When repayment is made before the final due date and the mortgagor must pay interest that would have been due across the remaining period.

Question 25

What is late redemption and what are the two requirements?

Answer 25

Late redemption is repayment after the due date.
The mortgagor must give the mortgagee written notice not less than 60 Days AND pay the mortgagee all amounts owing.

Question 26

What are the two notices/procedural requirements for mortgagee remedies?

Answer 26

s118 and s119 notice

Question 27

what are the four requirements under s120 that a s119 notice must comply with?

Answer 27

1. The nature and extent of the default
2. the action required to remedy the default
3. the timeframe within which the mortgagor must remedy the default
4. The consequences of the failure to remedy the default

Question 28

What happens if a s119 notice does not comply with all of the elements under s120?

Answer 28

The notice will be invalid and the mortgagee will not be able to exercise its remedies without issuing a new notice and waiting out the new elapsed time period.

Question 29

What are the 2 mortgagees remedies?

Answer 29

Accelaration clause, power of sale

Question 30

What are the three methods of power of sale?

Answer 30

High Court registrar sale, court assisted sale, private sale.

Question 31

What of the three methods of power of sale is the mortgagee not permitted to purchase the property?

Answer 31

Private sale.