security - 1+2 Flashcards
what is security
security is a property right over another asset to protect creditors
mortagee
lender
mortgagor
borrower
security interest
claim interest in personal property that can be used as collateral
what is an example of security interest
- loan for car
- if mor doesn’t pay back they can take possession of car
- sell to get back what they owed
s5 LTA
mtg creates interest in the land
explain s5 LTA
interest can secure not only payment but also the performance of obliagations e.g. contractual
registered mtg
under the Alta, priority and legal protection under the system of land title reg
unregistered mtg
still creates equitable mtg, recognised by equity but may not have the same priority/protection as a reg mtg
general reg for agreement involving land
-consideration (something of val exchanged)
-a written+signed document to comply w PLA
general reg for agreement involving land - MAORI FREEHOLD
- additional steps are required to validate alienation (transfer of mtg)
what do unsecured creditors get
to share the surplus of the assets
s4 PLA
formal requirements for land agreements including written and signature to ensure enforceability
what is a secured creditor
first claim over specific assets (e.g. land) reducing the risk of non recovery
lta mortgage
- creates a statutory charge
- give mee certain rights e.g. power of sale
mortgage under CL
a mtg transfers ownership of land to lender who holds until the $ is paid
mtg under equity
mortgage is a SI only with borrower retaining ownership and lender w/ charge over property
s99 lta
consider SI rather than transferring of property
s99 lta - estanda finance corp
confirm mtg holds direct interest in the land
s99 lta - re forrest
- statutory mtg confer groups of powers (like power of sale) rather than ownership of the land itself
agreement to mtg
-contract to create mtg in the future
- can give rise to equitable mtg if other necessary elements are satisfied e.g consideration
acceleration clauses
turns a loan with a specific time period into an upon demand loa under certain conditions
automatic clause
trigger acceleration of repayment when a specific condition is breached
call up clause
lender must specifically/explicitly demand repayment
function of acceleration clauses
breach allows for the conversion from term to upon demand
the mtg document 2 verisons
short form and full version
full version document mtg
detailed and outlining all t and c
short form document mtg
specific terms to this particular mtg and the standard terms from a registered memorandum
memorandum
pre reg doc including std terms being powers, obligation to secure prop and acceleration clauses, registration number and short form references
business - upon demand loan
payed at anytime or demand to be payed at anytime
- bank has power of call for repayment at anytime
-allows for flexible repayment
e.g of a upon demand loan
ANZ banking group v Gibson
ANZ banking group v Gibson question
- was 1hr 30 a reasonable time between demand and repayment
ANZ banking group v Gibson ruling
that upon demand was immediate repayment
- there was no specific period organised
- cannot use time to bargain with a third party for another loan
a + i form
authorise the solicitor to register the electronic version of the mtg so legally records the mtg against the property title
-VERY IMPORTANT
mtg with companies
reciever appointed by the security holder
what does a receiver do
appoint and replace the board of directors and decide if company have be salvaged or not
test of oppression
whether the terms breach reasonable commercial standards, not just unfair
opr - taylor v westpac
-fairness not test for oppression
- oppression requires the lenders to conduct breach of reasonable commercial standards
- need to show more than just the usual consequences of exercising the power of sale
op - ge custodians v bartle
- looking at the borrower and lenders knowledge of circumstances
- contract should not be seen as as oppressive unless the lender has a basis for knowing
- courts set the standard, objective, rather than the industry
op - raptorial holdings
lender of last resort so charged high interest rate
- was clearly oppressive and inconsistent w/ reasonable common practice on lending fees
all obligation/all monies mtg
- covers future loans of debts, allows for the extension/add to debt without needing to create a new security act each time
fixed amt mtg
new lion would make there a need to create a seperate security agt
signed loan document
- contains agt to mtg
- specify term or on demand
- incl obligation to mtg prop as security for the lion
s118 cccfa
defines oppressive conduct in the context of credit contact
- harsh, unjustly burden, unconscionable, in breach of reasonable commercial standards
s120 cccfa
- court has the power to reopen credit contracts, consumer leases and buy back transactions if oppressive, unjust, harsh
s117 cccfa
applies to credit contracts, consumer leases and buy back transactions
greenbank v haas
no oppression as he borrower had ability to seek legal advice and know of potential risks
-need to be in contravention of reasonable standards of practice
italia holdings v Lonsdale holdings
- oppressive should mean real detriment of hardship involved
-injustice must be shown to exist - was a business developer so knew what he was doing and had legal advice
mtg on future acquired property
-extend beyond the current property owned by the borrower and also covers property buyer acquires in the future
mtg on future acquired property case
Holroyd v marshall
Holroyd v marshall
agt to mtg can cover current and future prop
- implied condition that when borrower acquires prop, security over that prop
- equity regard mtg as extending to the newly acquired prop once borrower actually OBTAINS
