Financiers forced to act responsibly  

Legal Comment by Mark Illidge

Last month, the Queensland Parliament, by way of an urgent Bill, introduced amendments to the Property Law Act in the form of the Property Law (Mortgagor Protection) Amendment Bill in relation to mortgagee’s power of sale. The Attorney General commented that the introduction of the amendments was the result of "the current global economic and financial circumstances" and that "the purpose of the Bill is to strengthen the protections for mortgagors when mortgagees exercise such powers".

The legislation follows a Queensland Supreme Court decision where Justice Applegarth found that the mortgagee had breached its duty where it had accepted an offer for the sale of property. Even though the offer was higher than the valuation that the mortgagee had obtained four months previously, it was in a rising market.

Under the amendments the mortgagee must (unless it has a reasonable excuse):

• adequately advertise the sale;
• obtain reliable evidence of the property's value;
• maintain the property, including by undertaking any reasonable repairs;
• sell the property by auction, unless it is appropriate to sell it in another way; and
• do anything else prescribed under a regulation.

The amendments create an offence for a mortgagee for failing to follow the stated steps. The penalties range from $2,000 to $20,000 depending on the nature of the offence.

No date for commencement has been set at this time. However, the amendments will apply retrospectively in most cases.

The combined effect of the amendments and the recent Supreme Court of Queensland decision puts mortgagees/financiers on notice to take all reasonable steps to get the best possible sale price for mortgaged property when exercising power of sale.

To find out more about the authors you can read About Us

For more information or to make an appointment please Contact Us