FARM FINANCE

Hawke's Bay Tribune, Volume XXVI, Issue 236, 18 September 1936, Page 5

FARM FINANCE

Amendments to Mortgage Bill

EXTENSION OF TIME « ■' »■ i—■ (By lelegrapn— Press Association.: WELLINGTON, Kept. 18. The following amendments were introduced to the Mortgagors and Lessees Rehabilitation Bill by tho Hon, W. Nash in the House of Representatives this morning. The term “applicant” has been extended to include a guarantor as well as a mortgagor and lessee. This makes a guarantor au ordinary applicant who Is entitled to adjustment to the same extent as a mortgagor or lessee. This alteration is advisable because the definition of mortgagor has been restricted to a person who at present owns property as distinct from a person who signed a mortgage and then transferred the property. The latter is now included in the definition of guarantor. It is made clear that if a sub-lessee is in occupation he is also covered by the Bill. Another amendment makes it clear that a lessee under a lease containing an option to purchase can be dealt with as a mortgagor only when he has exercised the option, except where a lessee was subject to the relevant section in the 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 isub-clause brings deferred payment licences within the scope of the Bill as agreements for sale and purchase. Consequent on the new definition of a mortgagor, the owner of equity of redemption in any property is deemed to be the owner of the property. RELIEF FOR DEBTORS. A new clause has the effect of negativing several decisions by which it had been held that when a judgment had been obtained for moneys owing under a mortgage or lease the liability of the debtor no longer arises out of a mortgage or lease, but only out of the judgment. The effect of these decisions was to disentitle debtors to relief and the position in this respect is now altered accordingly.

Decisions of the Court have also declared that a mortgagor is not entitled to relief after a mortgagee has 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 a lessee may apply for relief in respect of his lease, notwithstanding file fact that the lease may have been determined or may have expired, in order to avoid the possibility of hardship to any party to proceedings before the Adjustment Commission. An additional seven days have been added to the time allowed for the lodging of an appeal to the Court of Review against decisions of the commission.

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. FINAL DATE FOR APPLICATIONS. One of the most important amendments is that extending the final date by which applications for adjustment must ba lodged from December 31 this year to January 31 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 hud been served and it provided that a mortgage or lease would automatically cease to be subject to legislation if a mortgagor or lessee failed to file statements required by the Adjustment Commission within the specified period of 21 days. Commissions are now given discretion to order whether or not a mortgage or lease should cease to be covered by legislation. I Attention has been paid in the amendments to tho possibility that although a mortgagoi 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 matter dealt with by the Adjustment Commission. Under a new sub-clause the commission may in such cases proceed with adjustment in the exercise of its powers, including its power to sell the property of a mortgagor to any of tho mortgagees or creditors. Another amendment makes it clear that although personal liability for moneys owing under a mortgage is discharged a mortgagee does not thereby lose any of his rights against the land itself. PERSONAL COVENANT. The commission is now enabled to raise moneys for any purpose that would increase the value of an applicant ’s farm lands. . An important provision is made regarding the personal covenant. If a mortgagee does not serve a guarantor (who includes ti mortgagor who is not now the owner of property) before December 31, 1936, with notice that he holds him liable as a. guarantor and stating that the guarntor can make application for adjustment not later than. January 31, 1937, the liability of guarantor is entirely discharged. If a mortgagee does serve this notice the guarantor is liable under the guanantee and unless he applies before January 3.1, 19<j7, for adjustment of his liabilities ho will lose the protection of any relief legislation. The discharge of the guarantor does not affect a mortgagee’s rights against any land secured in his mortgage.

Au amendment extends the last date on which applications for relief can be made from December 31, 1936, to January 31, tho Court of Review having power to extend the date still further to February 28.

A new clause protects mortgagor, lessee and guarantor from action by a rating authority to sell or lease a property for arrears of rates, and protection is extended to a mortgagee or lessor for the period until January 31, 1937, or the finish of adjustment. Applicants to the Court are still restrained from disposing of property or of obtaining credit without disclosing the fact that the) uro applicants, but

an additional offence is provided if he ifces not fulfil this obligation and he will be liable to the penalties to which he would be lia.be under the Chattels Transfer Act, 1924. The commission will now have power to cancel or vary orders on milk cheques and simialr assignments executed before or after the passing of the Act. Where a property which had been subject to adjustment is occupied by a tenant who is the lessee or mortgagee in possession, the Court is empowered to order posssslon to .be given to the mortgagee. Thu tenant will retain any protection he liu.« under the Fait Rents Act.