THE EMERGENCY LAWS.

New Zealand Herald, Volume LXIX, Issue 21223, 1 July 1932, Page 14

THE EMERGENCY LAWS.

RENT AND INTEREST CASES.

LEGAL ADVICE .TO READERS.

QUESTIONS AND ANSWERS,,

Inquiries continue to be made from the Hera LP by many correspondents who write asking for advice as to the meaning and application of the provisions contained in the National Expenditure Adjustment Act, bearing on reductions of rates of interest and rent. These are all handed to an Auckland barrister for consideration, and our legal correspondent writes answers to a number of correspondents to-day as follows: Correspondents forwarding questions should note that it is essential to write a complete statement of the relevant facts, as otherwise the incompleteness of their statements necessarily prevents adequate advice being given. "T.U.," for instance, writes to-day:— "What, rate of interest would a person now have to pay on a sum of money borrowed four years ago carrying interest at the rate of 10 per cent. 1" lb is impossibles to answer this question till two further facts aro given: (1) Whether the principal sum is payable "on demand," (2) is the sum secured by mortgage or bill of sale, or is it merely due under a promissory note? "R.S.H."—Your further letter explains your position fully. If you have not signed any further document since April 1, your case is definitely covered by the Act, and you are entitled to the statutory reduction. Assuming that you have been paying 6 per cent, since April 1, 1950, your rate will reduce to 5 per cent, from April 1, 1932. Of course, if you insist on this, your mortgagee, not having agreed to any extension at 5 per cent, so as to bind him, may call up the mortgage. From your second letter I take it that if he does so, your position is such that you cannot possibly pay, and that you will rely on the Mortgagors Relief Acts. I think you should pay at 5 per cent, meanwhile, and if any notice is given you under the Mortgagors Relief Acts calling up the mortgage, see your solicitor at once.

Mortgagor and Mortgagee,

"Subscriber" writes:—"l bought a house in October, 1931, and am paying interest at 6 per cent, on the balance of purchase money. What rate of interest shall I have to pay from April 1, 1932 ?"

Answer. —Since your contract was entered into after January, 1930, tho answer to your question depends upon the rate of interest that would have been provided by your contract had it been entered into on January 1, 1930. This rate, in your case, is then reduced by 20 per cent. The fixing of this rate is a matter of agreement between you and your vendor. I think it would probably have been 6 per cent, in your case. If it would have been 6 per cent., you will now pay 5 per cent.; if 6£ per cent, is fixed as the hypothetical rate, you will now pay £5 4s per cent. See your vendor and agree a3 to the rate, using these figures. "Anxious" has a question as follows: "I have a mortgage at per cent, which expired in July, 1930, and was renewed at that date at 7 per cent. What is the correct new rate—four-fifths of 7 per cent., or of 7£ per cent. 7" Answer.—This, too, depends on what rate would have been prescribed by the renewal, had it been signed on January 1, 1930. If at that date the renewal would have been at 7£ per cent., your rate will now reduce to 6 per cent.; but if (as appears more likely) the renewal would have been at 7 per cent., the rate will now reduce to £5 12s per cent. It is a matter for agreement between you and your mortgagor as to which rate would have been inserted in the contract had it been entered into on January I, 1930.

Outside the Act,

"Mother" says:—"ln April, 1932, I borrowed £lB5 on an insurance policy, and this sum falls due in July, 1933, at 8 per cent., reducible to 7 per cent. Is this subject to 20 per cent, or other reluction ? If I fail to pay interest, can compound interest be charged 7" Answer.—Contracts signed after April 1, 1932 k are not subject to the reductions prescribed by the National Expenditure Act, and you will have to pay at the rate prescribed, unless your contract was signed on the Ist. As to whether compound interest can be charged, that depends on tho terms of your contract with the company.

Lessor and Lessee.

"Urgent 26," writes: "I leased a house for one year from May 23, 1931, at a certain weekly rental. Am I entitled to a 20 per cent, reduction from April 1, 1932 ? Before my lease the house was occupied by the owner." Answer.—You.are within the provisions of the Act, but the amount of relief to which you are entitled will be very small. It will depend on the rate which would have been charged in a similar lease on January 1, 1930. As this will almost certainly be more than your present rent, and yon will be entitled to a reduction only to four-fifths of this hypothetical rent (and that reduction only for a period of seven weeks), I do not think it is worth pursuing the matter unless the landlord will voluntarily allow you some small .reduction.

"Impoverished Landlord" has a question aa follows: "My tenant under lease dated May, 1931, has not paid rent for some months, and proposes to rely on the Mortgagors and Tenants Relief Act. Can I, as lessor, exercise my right of re-entry without serving on tho tenant one month's notice under the Act, or is the onus on the lessee to lodge an application for relief to prevent immediate ejectment 7" Answer.—You need not give any notice other than any which you may be bound to give by the express or implied terms of your lease. The lessee, however, may apply to the Court under the 1932 Act for relief against ejectment. If he does so you will be prevented, as soon as his application is made, from going further until the matter is disposed of. You should be able to resist successfully any application for relief that, may be made by the lessee, unless, he can arrange to pay his rent up to date. You will find it will be wise to consult your solicitor in this matter. Weekly and Monthly Tenants.

As has already been fully explained, short-term tenants should come to a working arrangement with their landlords, since it is useless for a tenant to invoke the provisions of the Act as to compulsory reduction when his term is insecure and his tenancy can be determined by notice. Landlords, too, in cases on recentlycraatcd tenancies, will often be found to have made considerable reductions already since, January 1, 1930. "K..K."—The value mentioned by you is immaterial: there is no provision in the Act under which you are entitled to a percentage return. Rut if 'your tenant has no lease your position is clear. If you are, not prepared to reduce the rent, say so; ho may give you notice and find a cheaper place. On the other hand, if you want to keep your tenant, you must be, prepared to meet him reasonably. It is a matter for agreement, as stated above.

"F. 8." (Huntly).—Whether the rent is payable for the room or the furniture does not matter; th« whole renfc of £6 will reduce to £4 16s as from April 1. But, of course, you are liable to have the tenancy determined by notice if you insist on a statutory reduction, against the wishes of your landlord, when you bavo no lease. I assume from your letter that you ara prepared fo risk this.