It is proposed that the Property Law Bill 2023 will replace the current Property Law Act 1974 (PLA).
So what does that mean in regards property ? Below are some takeaways. If you deal with property matters, then it pays to keep up. Knowledge is power in the property industry. Overall, Part 8 of the new Bill balances the rights and obligations of mortgagees and mortgagors and clarifies some old confusions.
Balancing mortgagor’s and mortgagee’s rights
Can your mortgagee tell you what to do with an insurance payout?
Accelerated payment relief possible.
What happens when the mortgagee goes missing?
Mortgagee’s implied powers
Clause/section 113 gives mortgagees implied powers to deal with mortgaged land (or land and other property) subject to the mortgage documents. A mortgagee has several implied powers following:
- right to sell the property (or any part of) or a fixture on the land
- right to insure the land against loss and damage
- right to enter into possession (if mortgage is in possession to cut and sell timber on the land
- right to grant an easement, right or privilege in relation to the land
Remember: all rights are subject to the mortgage document. These powers ensure that a mortgagee has rights and powers in respect of their security interest.
Further, the mortgagee must sell property for market value (s 116); this applies despite any agreement to the contrary ie a mortgagee cannot contract out of this. The mortgagee must apply the sale proceeds in a certain order; any balance is to be paid to the owner of the property (s 118).
Mortgagor’s balance to Mortgagee’s rights
Balancing the above rights are the mortgagor’s rights. Clause 114 restricts the mortgagee’s right to exercise a power of sale. The following three elements must be met
- a default has occurred
- the mortgagee has given notice to the mortgagor (the notice must state the default and give 30 days to rectify)
- the default has not been remedied with 30 days .
The above is not subject to any agreement, ie it cannot be contracted out of.
The mortgagor is protected against the mortgagee selling the property for less than reasonable market value price (s 116).
The Bill stipulates when a mortgagee may require an insurance payout to be paid towards repayment of the mortgage and clarifies when a mortgagor may require an insurance payout to be paid towards the reinstatement of the mortgage property (section 91 PLA).
Qualified receivers only
Section 92 (PLA) sets out the appointment powers, remuneration and duties of the receiver. The Bill modernises the existing provision and varies it so that the receiver may only be appointed if suitably qualified and only if the mortgagee is entitled to take or enter into possession of the property.
Mortgagor’s rights in relation to accelerated payments.
An acceleration clause is standard in a many mortgage contracts. If a mortgagor is behind in payments, it allows the mortgagee to demand payment for all outstanding loan repayments ie immediately pay off the entire loan.
Section 130 limits the rights of a mortgagee to enforce payment of an accelerated payment if the mortgagor defaults; the mortgagee cannot exercise the power of sale (or start court proceedings) if the mortgagor remedies the default and meets any reasonable expenses of the mortgagee (Property Law Bill). If a mortgagee tries to enforce these rights, a mortgagor can apply (to the court) for relief against a claim for the accelerated payment.
The following section (131) limits the mortgagee’s rights in regards repayment of an overdue principal. A mortgagee cannot call up the principal amount with giving the mortgagor 3 (three) month’s notice.
Mortgagee v Mortgagor
Under section 97(PLA) where a mortgagee sues on the personal covenant in the mortgage and obtains a judgment debt, then the mortgaged property is not available to satisfy the debt; instead the mortgagee is required to elect to either exercise a power of sale or foreclose. The Bill extends its protective operation not only to the property against which the debt is secured but also to any other property over which the mortgagor has granted a mortgage to the mortgagee.
The result is that a mortgagee cannot sue to obtain the judgment and then execute the judgment against the security under the mortgage (or any other security under any other mortgage given by the same mortgagor to the mortgagee).
Mortgagee gone missing
The Bill (PLA s 101) allows a mortgagor to apply to court to obtain a release of mortgage where the mortgagee is absent, uncertain, or unknown and:
(a) extends the section to include a situation where a mortgagee has died but no personal representative is administering their estate; and
(b) clarifies that, if it is later proved that the mortgage debt was more than what was determined by the court to be payable, the remaining amount due and owing will continue to be a debt owing under the mortgage.
Legal update on the Proposed Property Law Bill 2023
The Property Law Bill (Qld) 2023 was introduced to Queensland Parliament on 23 February 2023 – The Scheme is a significant change to conveyancing in Queensland and it will be vital that people in the industry are familiar with it. The proposed bill is over 120 pages long so we’ve summarised some key points.
- E-Property Laws
- Instalment Contracts
- Land Lotto – are you entitled to land?
- Seller Disclosure Scheme
Please contact us if you have any questions in relation to this matter or if we can assist you with any other legal matter. We have offices across South East Queensland with the capability to work electronically through Queensland and Australia.