Mortgages Real Property Tutorial 3 Pre Preparation Worksheet 2 PDF

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Summary

tutorial worksheet week 5 answers...

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Who are you advising? What do they want? Veronica is seeking advice with regard to her interest in the property, subject to Betty’s interest; and whether she has a claim to proceeds of sale.

Legal issues and facts Issue 1: What is Veronica’s interest in the property? Does it have priority over Betty’s interest? Issue 2: How will the proceeds be distributed? Will V’s caveat protect her share, tacking considered Facts: -

Cheryl is the RP in fee simple. (Jan) Cheryl grants mortgage to Betty for loan of $250,000; Mortgage is registered.

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(June) Cherl obtains mortgage from Veronica for $50,000 – Veronica aware of prior mortgage. Veronica lodges caveat to protect interest but mortgage not registered.

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(Oct) Betty advances further $50,000 to Cheryl pursuant to initial agreement

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(Dec) Cheryl unable to repay mortgage; Betty enters contract to sell to Archie for $300,000

Principles and authorities Issue 1: What is Veronica’s interest in the property? Does it have priority over Betty’s interest? Principles & Authority: -

equitable mortgage: in writing; agreement to grant a mortgage, supported by part performance - 23C CA; 23E CA; Wildin

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Unregistered TT mortgages are equitable mortgages - Barry v Heider (1914).

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registered interest prevails over unregistered interest - s41, s42 RPA

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Implied power of sale in all mortgages – s109(1)(a) CA 1919

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TT power of sale must be exercised subject to s57, s58, s58A RPA

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M’er ac

RealProperty 70317

t in good faith & reasonable care (Cuckmere); s11A CA Issue 2: How will the proceeds be distributed? Will V’s caveat protect her share in regard to tacking? Principle & authority: -

M1 can add further advances if M1 had no actual notice of M2; RPA s 58; Conveyancing act s 112C) Hopkinson v Rolt (1961) , Central Mortgage Registry v Doneware.

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Caveat wont amount to actual notice (Central Registry of Australia v Donmore)

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Only original mortgagor and representatives (at death) will be liable – if mortgagee sees the property and funds obtained are insufficient to cover debt, the mortgagee can pursue mortgagor for shortfalls: s100 CA.

Application Issue 1: What is Veronica’s interest in the property? Does it have priority over Betty’s interest? The facts indicate that there was an agreement to grant a mortgage to Veronica but as it was unregistered, it will be recognised in equity (barry v heider). Betty’s mortgage is registered and earlier; thus, Betty’s mortgage is indefeasible under s41, s42 RPA, and has priority. Thus, Betty has power to sell under s57 RPA and has priority to full repayment of her loan ($300k). Betty is required to act in good faith and nothing in the facts suggests that this has not been the case. Therefore, Veronica will be unable to claim damages.

Issue 2: How will the proceeds be distributed? ? Will V’s caveat protect her share in regard to tacking?

The initial agreement includes the possibility of additional payments; however, Veronica’s interest is created prior to the advancement of the second payment ($50,000) from Betty. Betty’s interest will be subject to Veronica’s if it is proven that Betty had actual notice of the second mortgage. RPA s 58; Conveyancing act s 112C) Hopkinson v Rolt (1961)

The facts do not reveal whether Betty had any knowledge of the subsequent mortgage and a caveat will not amount to actual notice as per the ruling in Central Registry of Australia v Donmore.

D. Conclusions, Remedies and Advice Therefore, it would appear that Veronica will be not likely be able to receive any payments from the sale of the property due to the fact that Betty has indefeasible title, thus her interest prevailing. Furthermore, as a consequence of the fact that there was no actual notice per the ruling in Donemore, it is unlikely that Veronica’s caveat will protect her interest pursuant to the tacking....