THE EMERGENCY LAWS

New Zealand Herald, Volume LXIX, Issue 21247, 29 July 1932, Page 13

THE EMERGENCY LAWS

RENT AND INTEREST CASES LEGAL ADVICE TO READERS MANY QUESTIONS CONSIDERED A variety of problems continues to be roceived by the Herald from correspondents in town and country who are still unable to apply exactly to their own cases the provisions as to rent and interest reduction contained in the National Expenditure Adjustment Act. All such questions are submitted as they are received to an Auckland barrister for his consideration, and a number of his replies to correspondents are printed below. "Anxious" (Mount Eden) writes. —"1 sold a proporty in 1927 for £—, the purchaser paying a deposit and the balance of £1450 being left on mortgage back to me at 7 per cent. In 1931 the purchaser asked that the position bo reviewed, and I voluntarily reduced the principal by £l5O and reduced the interest on the balance to 6 per cent. Since that date, therefore, the mortgage has been one of £I3OO at 6 per cent. Will you please inform me if the interest must now be further reduced, and if so, to what rate ?" Answer.—You should be in. no worse a position because of your voluntary reduction. If there had been no re-arrangement in 1931 you would now have to reduce your rate from £7 per cent to £5 12s per cent, and the interest payable would have been reduced to £Bl 4s. You are now receiving 6 per cent on £l3oo—£7B per year, which is less than the rate to which you would have had to reduce. You have therefore already voluntarily given more than the compulsory reduction, besides writing off a part of the principal (which was not obligatory), and in my opinion you will therefore not need to reduce any further. You are entitled to 5 per cent on £I3OO. "Tenant."—Pay at 25s up to a date three months before the date on which the payment is actually made. From and after that date pay at £l. Mortgagor and Mortgagee "M.A." writes.—"Some years ago I borrowed £4OO at 7£ per cent, reducible to 6£ per cent if #>aid within 14 days of due date. Do I still have to pay t' 2 per cent ?" Answer.—Both rates reduce, and your rate is now 6 per cent, reducible to £5 4s per cent if paid within 14 days of due date. "Kent" sends a letter as follows:—"I bought a house in January, 1931, with £450 mortgage at 6£ per cent. When I asked last quarter for the reduction I was told. I was not entitled to it, as 1 had bought after 1931. Am I entitled to a reduction, and if so, how much should I pay per quarter ?" Answer.—You are entitled to a reduction. You should pay at £5 4s per cent, which will work out at £5 17s per quarter. "A.8.," Russell. —"Two years ago I gave a second mortgage for £— on a property, interest being at 7 per cent, and the principal to be paid off at £5 per month. I have paid up to date, but now cannot pay any more off the principal. Can I pay only the interest ? The term of the mortgage expires shortly, and what will my position be then, for I have no chance of paying off?" Answer. —You are protected by two Act 3. By the National Expenditure Adjustment Act your interest will reduce to £5 12s per cenW-this will work out at £ll 4s per annum on the balance of £2OO now owing. Pay interest at this rate to the mortgagee, and at the same time notify him of your position and frankly admit that you cannot repay the principal at present. You are also protected, both now and after the mortgago has fallen due, by the Mortgagors Belief Acts, which will prevent your mortgagee from exercising his power of sale unless he first gives you a month's notice under these Acts. Until you receive such a notice you are safe from your mortgagee. If you receive such a notice, see your solicitor at once and get him to apply to the Court f«r relief. The cost will be small; and you should see him promptly on receiving the notice, since you have only a month to object. Above all, sign no renewal or variation which will take your mortgage out of the protection of the statutes.

Landlord and Tenant " Smallholder" writes:—" I have a section on lease for five years from for which I am paying £2O per annum rent, six months in advance, lhe section is valued at £IOO. I have paid rent from April 1. Please let me know what reduction I am entitled to, through your legal columns." Answer.—All future payments wilt reduce by 20 per cent. As for the payment in advance which you have already mado as from April 1, I am afraid that you will not now be entitled to any refund in respect of this. The Act provides that if you wish to claim a refund you must either sue, or give notice in writing to your landlord of your claim, within three months of the date of payment, or your claim for a refund lapses. " Bargain."—The spirit actuating your inquiry is most commendable, but I confess that it is difficult to decide as to what should be the amount of your reduction. The lessees are certainly not entitled to a 20 per cent reduction (viz., from £IOO to £80) as the property was clearly worth £IOO in 1931, and in the circumstances the same property w°ul presumably have been worth more than £IOO in 1930. Allowing for a continuous equal fall in values from January 1, , to April 1, 1932, the rent as at the former date could be arbitrarily assessed at about £llO. On this assumption your rent should now reduce to about £BB per yearAs this amounts to little less than what j your lessee was formerly paying, I ™ ou advise you to offer to reduce to £BB per annum, and to show your lessee this reply. . , " Deeply Interested." —The capital value of the house is quite immaterial. You are within the provisions of the National Expenditure Adjustment Act. You are not entitled to a full reduction of 20 per cent on 30s, but you should now pay four-fifths of the rental which would have been obtainable for the house on January 1, 1930. This you will have to ascertain for yourself. Presumably, it is more than 30s. Whatever it is, pay four-fifths of it direct to the State Advances Office. Short Terra Tenancies «« puzzled."—You do not say when your tenancy commenced. If it commenced after April 1 last, you are entitled to no reduction at all. If it commenced before April 1, 1932, your rent will novv reduce to four-fifths of the rent that would have been obtainable for the house ° n " J W.H.?."—'Assuming that the rent obtainable for the house on January 1, 1930, would have been only 355, you aie entitled to a reduction to 28s. If, however the house could have been let for more than 35s on January 1, 1930,jsrour rent will reduce only to four-fifths of th rent obtainable at that date (e.g., if rent at that date was 37 s 6d, your rent now would be 30s and you would be entitled to no further reduction) No notice to the landlord is necessary. With regard to rebate, you are entitled to give your landlord a notice crediting yourself with a refund in respect of payments made not more than three months before th date when tho notice is g iven ; "Waikato Subscriber. —Your contract was entered into after April 1, and you are therefore not entitled to any reduction under the Act.