REMOVING A GRIEVANCE.

Hawera Star, Volume XLVII, 7 November 1927, Page 8

REMOVING A GRIEVANCE.

MORTG AGEE INDEMN IT Y INSURANCE.

NEW GOVERNMENT PROPOSALS

A new method of mortgagee indemnity insurance, designed to eliminate existing anomalies, is proposed ix the Mortgagee Indemnity (Workers’ Charges) Bill introduced into the House of Representatives by Governor-Gener-al’s message on Friday night, states the “Dominion.” “This Bill,” said the AttorneyGeneral (Hon. F. J. Rolleston), in explaining the measure, “deals with a matter which has for many years been a subject of grievance with mortgagors of both town and country properties. When the Workers’ Compensation Act came into force in 1900, it contained a. provision that in certain cases s* worker’s claim for compensation should be a charge on the land of the employer, and that this charge should take precedence of any mortgages. The mortgagee’s security would therefore be affected by the existence ot such a charge, and in order t< protect themselves against- this charge it has been the practice for mortgagees to insist that their mortgagors should take out an insurance policy indemnifying them against any such charge taking priority of their mortgage. The premiums payable lor this insurance, called a mortgagee indemnity insurance, vary from a minimum of 5s to a maximum of £2, according to the amount of the mortgage. When a mortgagor lias his workers insured against accident, as nearly everyone has nowadays, it is obvious that there is no risk to the mortgagee under this particular clause, and even if there were no insurance, the risk of the mortgagee suffering any injury would be very small. , , “Since ♦the year 1900, when the Workers’ Compensation Act first came into force, the number of cases in which a charge has been placed on the land ahead; of the mortgage has been very small—l have heard of only one. Consequently, mortgagors have felt aggrieved at having to pay this annual charge, and the question of. some relief beinor granted has been raised several times in the House. This Bill provides a cheap and inexpensive method ol meeting the position and of protecting the mortgagee. Under the Stamp Act everv mortgage has to he stamped with 2s’ Gd stamp duty when it is executed, and also with a similar duty when it is released. . “It is proposed by this Bill that in regard to mortgages hereafter executed the mortgagor, on presenting his mortgage for stamping, shall pay also a mortgagee indemnity fee of Is., which will he handed over to the RegistrarGeneral of Lands and form part of the Land Assurance Fund. This fund, which at the present time amounts to about £BI.OOO, will then he available for indemnifying the mortgagee against any claims under the Workers’ Compensation Act. ' “In regard to mortgages executed prior to the passing of the Bill, the same indemnity is given, and m this case the mortgagor will pay the additional Is when he presents the discharge of his mortgage for- stamping. The result is, therefore, that, bv payment of Is, every mortgagor m the country will have his mortgage insured against this liability for as long as his mortgage is in force. “T+, is estimated that the annual sum which will be forwarded under this scheme will he about £4OOO. In addition to this annual sum, the amount alreadv at the credit of the Assurance Fund is available.” The Bill was read a second time.