MORTGAGE BILL

Ashburton Guardian, Volume 56, Issue 290, 19 September 1936, Page 3

MORTGAGE BILL

AMENDMENTS INTRODUCED. SOME IMPORTANT CHANGES. RESTRICTIONS ON SALE. (Per Press Association.) WELLINGTON, September IS. The following amendments were introduced to the Mortgagors and Lessees Rehabilitation Bill, by the Hon. W. Nash in the House of Representatives to-day. The term applicant has been extended to include the guarantor as well as the mortgagor and lessee. Ths makes the guarantor an ordinary applicant, who is entitled to adjustment to the same extent as the mortgagor or lessee. This alteration is advisable because the definition of “mortgagor” had been restricted to the person who at present owns the property, as distinct from the person who signed the mortgage, and then transferred property. The latter is now included in the definition of guarantor. It is made clear that if the sub-lessee is in occupation, he is also covered by the Bill.

Another amendment makes it clear that the lessee under a lease containing the option to purchase can he dealt with as a mortgagor only when he has exercised the option, except where the lessee was subject to the relevant section in Mortgagors and Tenants Relief Act, 1933. Lessees of the latter class are deemed to have notified their intention to exercise the option, and are therefore mortgagors for the purpose of the Bill.

A new sub-clause brings deferred payment licenses within th» scope of the Bill.

Sale anc! Purchase.

As agreements for sale and purchase, consequent on the new definition of “mortgagor-owner” of equity of redemption in any property, is deemed to be the owner of tho property, the new clause has the effect of negativing several decisions by which it has been held that when judgment has been obtained for moneys owing under a mortgage or lease, the liability of the debtor no longer arises, out of the mortgage or lease, but only out of the judgment. The effect of these decisions was to disentitle debtors to relief, and tho position in this. respect is now altered accordingly. Decisions of the court have also declared that the mortgagor is not entitled to relief after the mortgagee lias exercised his power to sell. That position is also altered by an amendment to the Bill, which now gives mortgagors the right to obtain relief in the circumstances outlined. There is a further provision that the lessee may apply for relief in respect of his lease, notwithstanding the fact that it may have been' determined, oi may have expired. In order to avoid the possibility of hardship to any party to the proceedings before the adjustment commission, an additional seven days have been added to the time allowed for the lodging of appeal to the Court of Re\ iew, against the decisions of the Gommission.

Guarantors have been included in the definition of the term “applicant” in the Bill, which now enables a guarantor to make application for the same adjustment that can be granted to mortgagors and lessees. One of the most important .amendments is that extending the final elate by which applications for adjustment must bo lodged from December 31 this year to January 31 of next year. A sub-clause in the original Bill dealt with the .requirements imposed on a mortgagor or lessee, on whom a copy of an application had been served, and it provided that the mortgage or lease would automatically cease to be subject to legislation if the mortgagor or lessee failed to file the statements required by the Adjustment Commission within a specified period of 21 days. The commissions arc now given discretion to order whether o.r not the mortgage or lease should cease to be covered bvi the legislation.

Rights in Hand. Attention has been paid in the amendments to .the possibility that although a mortgagor may take no interest whatever in the adjustment of his liabilities, some other creditor, such as a second mortgagee, may be vitally concerned, to have the mattei dealt with by the Adjustment Commission. Under the new sub-clause, the Commission may, in such cases, pioceed with the adjustment, and in the exercise of its powers, including 1 power .to sell the property oi a moitgagor to any of the mortgagees or creditors. Another amendment makes it clear that although personal liability loi moneys owing under mortgage is discharged, the mortgage does not thereby lose any of the rights against land itself. The Commission is now enabled to raise moneys for any purpose that

'would increase the value of an applicant’s farm land.

An important provision, is made regarding the personal covenant. If a mortgagee does not serve a guarantor (who includes a mortgagor who is not now owner of the property), before December 31, 1936, with a notice that lie holds him liable as guarantor, and stating that the guarantor can make application for adjustment not later than January 31, 1937, the liability of tho guarantor is entirely discharged. 11 a mortgagee does serve this notice the guarantor is liable under the guarantee, and unless he applies before January 31, 1937, for an adjustment of his liabilities, he will lose the protection of any relief legislation. The discharge of a guarantor does not affect the mortgagee’s rights against any land secured in his mortgage. An amendment extends the last date on which applications for relief can he made from December 31, 1936, to January 31, the Court of Review having power to extend the date still further to February 28.

A new clause protects the mortgagor, lessee, and guarantor from action by a rating authority to sell or lease the property for arrears of rates, and protection is extended to tho mortgagee or lessor for a- period until January 31, 1927, or to the finish of an adjustment. Applications to the Court are still restrained from disposing of property, or of obtaining credit without disclosing the fact that they are applicants, but an additional offence js provided if he does not fulfil this obligation, and he will he liable to penalties, to which he would be liable under the Chattels Transfer Act, 1924. The commission will now have power to cancel or vary orders on milk cheques and similar assignments, executed before or after the passing of the Act, where the property which has been subject to adjustment is occupied by a tenant, who is lessee or mortgagee in possession. The Court is empowered to order possession to be given to the mortgagee. The tenant will retain any protection ho has under the Fair Rents Act. Many applications have already been made for revaluation of rural Crown lands, and the Bill has been amended to provide that such applications for revaluation shall he deemed to be applications under the Bill. Provision has been embodied restricting the sale of land in respect of which adjustment has been made, and without the special leave of the Court, no sales may be made before January 1, 1941.

In granting leave to sell a property the Court may require the mortgagor to pay into the Court such portion of the sale price as the Court thinks equitable, having specially in view the improvements made to the land since tho date of adjustment, and this money is to go to the creditors. The previous legislation omitted to embrace family protection orders, and orders for alimony, where the terms of tho deed, etc., were modified on the grounds that there was a hardship to the person making payment. The Bill extends the date under which this provision operates to March ill, 1937, and brings these orders into line with similar orders. Pooling Agreements. The Court is given power to vary pooling agreements made before the 1933 Act, which is still in existence, and in the same way it can vary orders. The Court is also empowered to vary orders made under the 1933 Act. A new provision is included by which the trustee or provisional trustee appointed under the 1935-36, Act is retained in office. A division was called on the subclause providing that members of tho Court should vacate office on the passing of the Bill. Mr Coates moved to have the subclause deleted, but it was retained by 41 to 13.

Mr W. J. Poison moved an amendment to delete the clause which abolished the mortgage adjustment commissions.

The House resumed at 2.30. Mr Poison’s amendment to delete the provision abolishing Mortgage Adjustment Commissions was defeated by 30 to 14. Coming to the clause dealing with basic values of farm lands, Mr Poison moved amendments with the object oi providing a. sinking fund not exceeding 1 per cent, to give the farmer an equity in his land. After some discussion, the amendment was lost on tii.o voices. Mr Coates moved an amendment to clause 41 so that the Adjustment Commission may, with the consent of the mortgagee and mortgagor, sub-divide and sell any portion of the mortgaged land on conditions which it determines.

The amendment was lost hv 32 to 12

Mr Bodkin moved a further amendment to provide that with the consent of the mortgagee, the mortgagor may borrow any part of the sum to bo repaid. The amendment was lost by 30 to 12.

.Progress was reported when clause 47 was under consideration, and the House rose at 0.30 p.m.