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Property Law (Mortgagor Protection) Amendment Bill 2008
Property Law (Mortgagor Protection)
Amendment Bill 2008
Explanatory Notes
Objective of the Bill
The objective of the Bill is to protect the interests of mortgagors whose
properties are sold by mortgagees by strengthening the provisions relating
to the duty of the mortgagee to take reasonable care to ensure the property
is sold at market value.
Reasons for the Bill
In the current global economic and financial circumstances, there are
concerns about the position of mortgagors when mortgagees exercise their
powers of sale. Strengthening laws that promote care being exercised to
sell the mortgaged property at market value can assist the mortgagor by
minimising residual debt or maximising the return of equity.
Achievement of the Objective
The Bill amends section 85 of the Property Law Act 1974:
· to extend the duty of the mortgagee exercising power of sale to take
reasonable care to ensure that the property is sold at market value to
situations where property is sold by a receiver under a delegated
power or by the mortgagee as attorney for the mortgagor;
· to specify steps which the mortgagee for a "prescribed mortgage"
must follow to satisfy that duty; and
· to create an offence for a mortgagee under a "prescribed mortgage"
for failing to follow the stated steps.
Estimated Cost for Government Implementation
The proposals for amendment to the Property Law Act 1974 have no cost
implications for Government.
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Property Law (Mortgagor Protection) Amendment Bill 2008
Consistency with Fundamental Legislative Principles
The proposed amendment to insert new subsection (1A) in section 85 of the
Property Law Act 1974 provides for the mortgagee's duty to include taking
stated actions and "to do anything else prescribed under a regulation". This
provision (a "Henry VIII clause") may be argued to not have sufficient
regard to the institution of Parliament. However, the provision is
considered to be justified where it is limited to the specification of
procedural steps that a mortgagee might take in satisfying the duty to take
reasonable care to ensure that the mortgaged property is sold at market
value.
The proposed amendment to insert new subsection (10) in section 85 of the
Property Law Act 1974 provides for the definition of "prescribed
mortgage" as "a mortgage of a kind prescribed under a regulation". This
definition is relevant to the application of steps included in a mortgagee's
duty to take reasonable care to ensure that property is sold at market value.
This provision (a "Henry VIII clause") may be argued to not have sufficient
regard to the institution of Parliament. The definition is intended to capture
mortgages over land of a consumer credit nature. This regulation-making
power will allow the provision to respond to emerging concepts as to the
scope of consumer credit.
Consultation
There has been no consultation on the proposed amendments.
Notes on Provisions
Clause 1 provides for the short title of the Act
Clause 2 provides for the commencement of the Act.
Clause 3 provides that the Act amends the Property Law Act 1974.
Clause 4 amends section 85 of the Property Law Act 1974:
· to extend the duty of mortgagees exercising powers of sale to take
reasonable care to ensure that property is sold at market value in
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Property Law (Mortgagor Protection) Amendment Bill 2008
situations where property is sold by a receiver under a delegated
power or by the mortgagee as attorney for the mortgagor;
· to specify steps which the mortgagee for a "prescribed mortgage"
must follow to satisfy that duty; and
· to create an offence for a mortgagee under a "prescribed mortgage"
for failing to follow the stated steps.
Clause 5 is a minor amendment consequential upon the amendments in
clause 4.
Clause 6 inserts new Part 21 of the Property Law Act 1974. The Part
includes a transitional provision for the amendments to section 85 to apply
to mortgages whether made before or after commencement. It provides for
section 85(1A), as inserted by clause 4, not to apply to a mortgagee or
receiver if, immediately before the commencement, the mortgagee was
entitled to exercise the power of sale and was not prevented from doing so
by section 84(1) of the Property Act 1974.
© State of Queensland 2008
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