THE EMERGENCY LAWS.

New Zealand Herald, Volume LXIX, Issue 21224, 2 July 1932, Page 12

THE EMERGENCY LAWS.

RENT AND INTEREST CASES.

LEGAL ADVICE TO READERS

DIFFICULT POINTS EXPLAINED

Considerable interest continues to be taken bv readers of the Herald in the provisions'" of the National Expenditure Adjustment Act as to rent and interest reductions and the correct method of applying these provisions to particular cases. Inquiries received regarding these matters are placed regularly before an Auckland barrister for his consideration, and a number of replies to questions are printed to-day as fobo>\s. " H.H." (Huntly).—Your letter does not contain sufficient details to enable me to answer your question, Are you a mortgagor to the State Advances Department? If so, what rate of interest are you paying? "Twenty Years' Subscriber." —(1) You should see tho Land Board about your lease. It has been running for so long that it is possible that you are not in fact entitled to a reduction, as the rental value, had your contract been entered into on January 1, 1930, would possibly have exceeded Is 10|d. I would advise you, however, to see the board. (2) You are entitled to no reduction on your overdraft mortgage, since it is a mortgage payable "on demand," and hence expressly excluded from the Act. {3) I cannot understand your third question; if it is not covered by my other two answers, please write 3gain more fully.

" Worried." —I assume that your mortgage is three years overdue and (though you do not say so) that it has been running: on ever since 1929 at 7 per cent, without any formal renewal being signed. If this is so, you are entitled under the Act to a reduction to £5 123 per cent-. (There is no compulsory reduction to five per cent, in yonr case.) Your mortgagee, of course, can call, up the mortgage; but if he does so, I imagine that in your circumstances vcu would be protected by the Mortgagors' Relief Acts. If the mortgagee takes any steps to call up the mortgage, or gives you notice under the Mortgagors' Relief Act, sea your solicitor; meanwhile pay £5 12s per cent, as from April 1 last. " 8.8." —(1) You will have to reduce the interest on your first mortgage of £2500 from 6 per cent, to 5 per cent. On the other hand, the rate of interest payable by you on your overdraft is not affected by the leg:s!ation. (2) The interest on your second mortgage will now be reduced to 5 per cent, as from April 1 last, and yon will not be allowed to increase it after the mortgage falls dae, except by agreement with the mortgagor, or by order of the Court. Instalments on Table Mortgages.

"Curious'' writes:—"l have a Stat* Advances loan on rnv farm, and the interest fill due on April 1 last. I pa:dit at the old rate. Am I entitled to a rebate ? Also, what rate per cent (apart from sinking fund) should I pay in future

Answer.—State Advances loans are subject to exactly the same rales as other "table mortgages." The part of each instalment which consists of principal, or sinking fund, remains payable just as before; but the part which consists of interest is reduced in accordance with the Act. The minimum rate to which interest may be compulsorily reduced, however, is 5 per cent., and in many cases State Advances mortgagors are already paying only 5 per cent, or less (net). In such cases the mortgagors, will obtain no reduction, but if you are paying more than 5 per cent., your interest will reduce to 5 per cent. As to rebate, the question does not arise in your case, since the reduction takes effect only from April 1 last. "Cocky's Wife" —See answer to "Curious" above. If you are paying 5 per cent, or Jess (net) interest, you will obtain no- re-auction. lif your rate is more than 5 per cent., your rate will reduce to 5 per cent.. You will, of course, obtain no relief as to the part of your instalment which consists of principal. Write to the State Advances Superintendent, Wellington, and ask what rate of interest yon are paying. If you are entitled to any rebate you will be entitled ,'is from April 1. -In a F-V' The the S;a<^ A«lvun«.-w mcrt-rago: , afcovc v '"i;{ be fount! St voar case. The part of each instalment which consists of principal will continue to be payable, but the interest will be reduced from 6j per cent, to £5 4s per cent. This will mean a reduction in the amount of the instalments. In your case, however, something more than a legal question is involved. It is really imperative for you to come to an arrangement with your purchaser to keep up payments on some definite basis, and I advise you to confer with him and arrange for payments to be kept up regularly, even at a considerably reduced rate. "Jap."—(l) The above answers will be found to apply to your vase also. Your half-yearly instalments will be reduced. Each half-year you will be entitled to be paid the amount of principal which would have been paid to you under the contract; but the balance of the instalment, consisting of interest at 6£ per cent., will reduce so as to make ihe interest payable at £5 4s. (This answer assumes that the contract for sale was entered into in

the years 1925-29 inclusive.} (2) The inter est - red tt ci ion provisions apply both to penal rate and net rate—each is reduced, separately, by 20 per cent. Then, , if the interest is not paid within the time ; limited by the mortgage, the (reduced) ; penal rate may be charged. Lessor and Lessee, "Teiara."—You do not say whether the | £3OO cash has been or is being paid. | Assuming, however, that the compulsory i purchase is beinc carried into effect as ; from June 1, 1952, your position is as ' follows: —(11 Your tenant, was correct in ; claiming a reduction on his last quarter's : rent, but, as he was entitled to a reduci tien only from April 1, can claim only £2. (2) As from June 1, 1952, I presume he is no longer a tenant, but a purchaser, and must either (a) pay £3OO I cash and interest on £9OO balance, or {b) j pay interest on £I2OO until the £3OO is I paid. In this case his interest will not | be 6 per cent., but 5 per cent, i "Crops."—Your contract, having been entered into before April 1. is subject to the Act, and the rent under it will reduce. Your reasoning as to the JesaJ principles involved is quite correct: and assuming thai the rent that would have been charged. if your contract had been entered into on January 1, 1930. would have been £96 (which appears reasonable!, then your present rent of £304 will reduce by one-fifth. As to the procedure, simply pay at the reduced rent, and allow the landlord to take any proceedings he may think fit. As soon as he gives von any no'ire, or attempts 1.0 eject yo*. or if such a thing is seriously threatened, see your solicitor at once. "Glasgow Lease."—You will lie covered by the Act, but the amount of relief to which you are entitled will bo found to be limited by the two following considera•ions:—(l) Hie rent cannot be reduced below 5 per cent, of the unimproved value of the land. (21 The reduced! rent will be four-fifths of the rent that would have been prescribed by the lease if it had been entered into on January 1, IS3O. If you take ;hese two factors into consideration I think it may be doubtful whether, in fact, you will be able to obtain any reduction.