THE EMERGENCY LAWS

New Zealand Herald, Volume LXIX, Issue 21249, 1 August 1932, Page 13

THE EMERGENCY LAWS

RENT AND INTEREST CASES LEGAL ADVICE TO READERS A VARIETY OF PROBLEMS Numerous letters of inquiry continue to be received by the lleuald from correspondents who are still uncertain as to how to apply to their own particular cases the provisions of the National Expenditure Adjustment Act as to reductions of rent and interest. All such inquiries are periodically referred to an Auckland barrister for consideration, and a number of bis replies are printed to-day as follows: " E.S." (Maungaturoto).—Yes, you still have to pay the unemployment tax, Is in the pound, on your income. The deduction made from your debenture interest 's nothing to do with the unemployment taxation ab all, but is really a reduction of the interest payable by the local authority. The stamp duty paid by you will be handed over to the borough in due course. " M.M."—I lako it that the mortgagee executed at A's request a proper and enforceable variation of the mortgage, reducing the interest to per cent. If he did this, and A sold to B subject to the mortgage, then B, of course, can claim from the mortgagee the same benefits as those to which A was entitled under the variation. But if A did not obtain a proper variation of the mortgage from the mortgagpe, then ho and B have both only themselves to blame for not taking proper precautions. As to which (of A and B) will have to bear the loss if this is the case, it is a matter to be decided by the terms of the contract between them. " Subscriber " (Te Puke). —You are entitled to a reduction from 6 per cent to 5 per cent as from April 1, 1932. In the half-year's interest ()ue next month you will pay at 6 per cent up to April 1 and at 5 per cent fo'r the balance of the halfyear. After this half-year you will pay at 5 per cent while the Act is in force. Mortgagors and Mortgagees "Widow" (Kingsland) writes:—"My interest will be due shortly, this being the first payment since the rates were reduced. I have been paying 6' 2 per cent. Will the mortgagee notify nie that my interest is reduced ? Or shall I inquire from him whether he is willing or not to reduce? Answer.—On the assumption, of course, that your mortgage was signed before April 1, 1932, you will be entitled to a reduction to £5 4s per cent as from April 1 last. You need make no inquiry; simply pay the reduced rate of interest (fourfifths of your old payment) to the mortgagee. He will probably not notify you in any way. No notice is necessary and you are entitled to the reduction.

" L.O. " writes:—'• I sold my property, leaving a sum on mortgage, on which interest is payable as from April 16, 1932. When negotiations were on foot I agreed on March 25 to sell the property, and ray solicitor drew upr aVi agreement, which was dated March 25, 1932. The mortgage was operative from April 16. Is the mortgagor entitled to a 20 per cent reduction ?" Answer.—Whether the mortgagor is entitled to a reduction depends on one factor only: the date when the mortgage was signed. You do not give this in your letter. If the mortgage was signed after April 1, 1932, you need give no reduction. If the mortgage was signed before that date, it comes under the provisions of the Act and, theoretically, you are required to give a reduction. The actual amount of the reduction, however, will not be 20 per cent, since you are required to reduce only to four-fifths of the rate which would have been obtainable under a similar contract entered into on January 1, 1930—a, date at which the rate would presumably have been higher than the one actually charged by your mortgage. If you find that this does not help you, you should appeal to the Court for an order exempting your mortgage wholly or partially from the operation of the Act under section 38, on the ground that the rate of interest payable under the mortgage "is fair, taking into consideration the nature of the security," and that any reduction "would be a cause of undue hardship." In your case I feel that you would receive sympathetic treatment from the Court. "Subscriber" (Onehunga).—Generally the Court (acting under the provisions of the Mortgagors' Relief Act:}) will excuso the non-payment oF principal under the circumstances you mention; but it will not generally allow continued non-payment of interest. You should give your mortgagor notice under the Mortgagors' Relief Act of your intention to exercise all your powers, and then apply in duo course to the Court for an order under section 118 of The Land Transfer Act, 1915, to- have the mortgagor ejected. See your solicitor, for these measures are dangerous if taken by the layman. Leases and Tenancies "Justice No. 1" writes: "In October, 1931, I leased a property for five years at £— per annum. I have asked my landlord to reduce my rent, but he says that I have no claim to a reduction, as the Act does not apply to short leases. Can I deduct without the consent of my landlord ? Answer.—You are within the Act and nre entitled to a reduction whether your landlord consents or not. As to the amount of the reduction to which you are entitled, it depends entirely on the rental value of the property as at January 1, 1930. Ascertain this, and you should now pay four-fifths of this hypothetical rental. The rent as at January 1, 1930, must be determined by agreement between you and your landlord. Come to an agreement with him as to this figure and pay four-fifths of it. If you cannot agree, assess the figuro for yourself and pay four-fifths of it, and leave him to apply to tho Court if he is dissatisfied. ' "In Doubt."—lf your house was not in existence in 1930 I cannot say exactly what basis you should proceed upon. You are entitled to some reduction, and on the assumption that your lease-did, not commence till the second half of 1931 (which useful detail Is not contained in your letter) I would suggest that a 7£ per cent reduction, amounting to _ (say) 3s 6d, would approximate to a fair decision. It is really a matter for agreement between yourself and your landlord; but if you cannot agree it is for the Court to decide. If it comes before the Court I think some compromise, such as the one I suggest above, would bo the decision at which tho Court would arrive. "Constant Reader:"—(l) o*i the first lease I cannot say definitely if you are entitled to a reduction, sinco you do not give the unimproved value of the section. I think, however, that it is probable that you are not entitled to any reduction. (2V You are not entitled to any reduction in respect of either of tho other two leases. "Anxious."—l do not think there is any reason why the Act should not apply to your house. But before you insist on your legal rights would it not bo wise to reflect on the possible consequences of quarrelling with the department? It is not going to benefit you to have your rent reduced if you lose your employment. I think that your case is pre-eminently one for peaceful negotiations, with the question of legal rights relegated severely to tho background.