THE EMERGENCY LAWS.

New Zealand Herald, Volume LXIX, Issue 21233, 13 July 1932, Page 12

THE EMERGENCY LAWS.

RENT AND INTEREST CASES. LEGAL ADVICE TO READERS. QUESTIONS AND ANSWERS. Inquiries continue to be received by the Herald from correspondents in town and country who are puzzled as to the application to their own particular cases of the provisions bearing on rent and interest reduction contained in the National Expenditure Adjustment Act. All such inquiries are referred to an Auckland barrister for consideration, and our legal correspondent has forwarded a number of replies to-day as follows: — "Civis" writes: —"In June, 1930, I agreed to pay my mortgagee 6 per cent, on a mortgage, if ho extended the mortgage for a further term. Tho rate of interest had previously been 5 per cent. Is there an Act now passed compelling the mortgageo to reduce again to 5 per cent. ?" Answer.—Yes. The rate will reduce to 5 per cent, as from April 1, 1932. "Inquirer" writes:—"l sold z property about eight years ago. When the balance of purchase money fell due four years ago, the mortgagor could not pay. He then signed an agreement to pay a certain sum off the capital until the mortgage had been reduced by £lso'. He paid for a year and I then reduced the instalment by a-half. He has now had his interest reduced by 20 per cent., but refuses to pay any more of the principal. What is the position ?" Answer.—The position is governed by two separate pieces of legislation. By the provisions of the National Expenditure Adjustment Act your mortgagor obtains a reduction of 20 per cent, in all his interest payments. This you have already granted him. There is no statute by which he has a similar absolute right to any reduction of instalments of principal. But before you can proceed to exercise your powers under the agreement, so as to force him to pay hi 3 instalments, you will have to give him notice of your intention to do so under the provisions of the Mortgagors' Relief Acts. If you do this, he may apply to the Court for relief, and the Court may relieve him in respect of a part or all of the instalments of principal (i.e., it may make an order postponing the payments). Whether an order will be made depends on whether it is lair, considering all the circumstances of the case, including your financial position and that of the mortgagor. Do not attempt to give notice under the Mortgagors' Relief Act yourself, but see your solicitor. Mortgagees and Mortgagors. "Anxious" writes in a somewhat similar strain:—"The term of my mortgage is up next March. I have a mortgage of £— at 6 per cent. I have always paid my interest promptly, but think that my mortgagee will call up the principal when due. I have improved the property during the term of the mortgage, and so have not been able to reduce the principal. The mortgagee is a man of independent means. I hope you will advise me." Answer.—Your case is similar to that of "Inquirer" above, but while he was mortgagee you are mortgagor. Your interest will reduce, as from April 1, 1932, to 5 per cent., under the provisions of the National Expenditure Adjustment Act. When your mortgage falls due next March, if you cannot repay same, you will be by the Mortgagors' Relief Act. Your mortgagee will not be able to call up the principal sum without giving you a month's nptice under that Act, and if you receive such a notice you should see your solicitor at once and apply to the Court for relief. On the facts stated in your letter you should have no need to worry. The cost .of such an application to the Court is small. Do not sign any extension or renewal, which will take your mortgage out of the provisions of the National Expenditure Adjustment Act. "Trustee."—While tho Act docs not compel you to inform the mortgagor of the benefit to which he is entitled, it is proper for you to do so in the circumstances mentioned in your letter. If you were to accept the full amount paid, and pay it over to your beneficiary, and were later sued by the mortgagor for a refund, you might regret not having made tho position clear now. The mortgagor may sue for a refund at any time up to three months after the date when the excess payment was made. "Perplexed."—lt is difficult to advise you without knowing a little more about the agreement mentioned in your letter. What was the date of it ? You say that the property sold included freehold, building, machinery and goodwill. Was any title given to the land, or is the purchaser still holding under agreement ? Were the chattels sold under a bailment or hire-purchase agreement; or was a bill of sale given back to you ? Or were they simply sold under tbe original agreement? If you will answer the above, I can advise you definitely. "A.M.S." says:—"l have an advance upon my stock from a firm of stock and station agents, and during last year reduced it by £——. Are they entitled to charge me 9 per cent, on the amount owing ?" Answer. —I think that they are. The answer depends upon a detail upon which you give mo no information—is your stock advance payable "on demand" ? If it is (and such advances usually are) then you have no claim to any reduction, since "demand" mortgages are excluded from the operation of the Act. Lessor and Lessee. "Hard-up Cockie" writes; —"I have leased a farm from August, 1930, for five years at £ a year. Will you let me know if I am entitled to a reduction, as I have been hard put to it for a start ?" Answer.—Yes, you are entitled to a reduction. To assess the amount of the rent that you will now have to pay, you will first have to assess the rent that would have been prescribed in ycur leaso if, instead of being entered into on August 1, 1930, it had been entered into on January 1, 1930. Then take fourfifths of this sum, and this will be your new rent under tho Act. Tho rent is payable at the reduced rato as from April 1, 1932. Assuming that the rent on January 1, 1932, would have been the same as was actually prescribed by your lease, your rent will reduce to £l4B per year; but even if the figure is put at £2OO, this would reduce to £l6O. You must agree with your landlord as to what this hypothetical rent would have been; and if you cannot agree, the matter will have to be settled by tho Court. In the meantime, pay at the rate of four-fifths of the rate that you yourself think would have bsen fixed if the contract had been entered into on January 1, 1930. "Bell" (Pukemiro). —You are definitely entitled lo a reduction, as from April 1, 1932. Your rent reduces from 35s to 28s per week. Deduct the 7s yourself, simply paying 28s per week to your landlord. If you have overpaid any rent you can recover it within three months of the date when the over-payment was made. If you have paid the full amount ever since April 1, 1932, there will now be a short period in respect of which, having gone over the three months, you can obtain no reduction. But if you have dono this, you are now entitled to credit yourself with 13 weeks' rebate at 7s per week (£4 and thus treat yourself as having paid in advance to this extent.