THE MORTGAGE BILL

Evening Star, Issue 22447, 18 September 1936, Page 8

THE MORTGAGE BILL

MINISTER INTRODUCES AMENDMENTS IMPORTANT QUALIFICATIONS AND CHANGES [Per United Press Association.] WELLINGTON, September 18. The following amendments were introduced to the Mortgagors’ and Lessees’ Rehabilitation Bill by Mr Nash in the House this morning:— The term applicant has been extended to include a guarantor as well as a mortgagor and lessee. This makes the guarantor an ordinary applicant who is entitled to adjustment to the same extent as the mortgagor or lessee. This alteration is advisable because the definition of a mortgagor has been restricted to the person who at present owns the property as distinct from the person who signed the -mortgage and then transferred the property. .The latter is now included in the definition of guarantor. It is made clear that if the sub-lessee is in occupation, he is also covered by the Bill. Another amendment makes it clear that the lessee under a lease containing an option to purchase, can be dealt with as a mortgagor only when he has exercised his option, except where the lessee was subject to the relevant section in the Mortgagors’ and Tenants’ Relief Act 1933. Lessees of the latter class are deemed to have notified their intention to exercise their option, and are therefore mortgagors for the purpose of the Bill. A new sub-clause brings deferred payment licenses within the scope of the Bill as- agreements for sale and purchase. Consequent on the new definition of a mortgagor, the owner of the equity of redemption in any property is deemed to be the owner or the property. A new clause has the effect of negativing several decisions by which it has been held that when judgment has been obtained for moneys owing under a mortgage or lease, the liability of the debtor no longer arises out of the mortgage or lease, but only out of the judgment. The effect of these decisions was to disentitle debtors to relief, and the position in this respect is now altered accordingly. Decisions of the court have also declared that a mortgagor is not entitled to relief after the mortgagee has exercised his power to sell. That position is also altered by an amendment to the Bill, which now gives mortgagors the right to obtain relief in the circumstances outlined. There is a further provision, that the lessee may apply for relief in respect of his lease, notwithstanding the fact that the lease may have been determined, or may have expired. In order to avoid the possibility of hardship to any party to proceedings before an adjustment commission, an additional seven days have been added to - the time allowed for the lodging of ah appeal to the Court of Review against the decisions of a commission Guarantors have been included in the definition of the term “ applicant ” in the Bill, which now enables a guarantor to make an application for the same adjustment that can be granted to mortgagors and lessees.One of the most important amendments is that extending the final date by which applications for adjustment must be lodged, from December 31 this year to January 31 next year. A sub-clause in the original Bill dealt with tho requirements imposed on a mortgagor or lessee on whom a copy of an application had been served, and it provided that the mortgage or lease would automatically cease to be subject to the legislation if the mortgagor or lessee failed to file the statements required by the adjustment commission within a specified period of 21 days. Commissions are now given discretion to order whether or not a mortgage or lease should cease to he covered by the legislation. Attention has been paid in theamendments to the possibility that, although a mortgagor may take no interest whatever in the adjustment of his liabilities, some other creditor, such as a second mortgagee, may be vitally concerned to have the matter _ dealt with by an adjustment commission. Under a new sub-clause a commission may in such cases proceed with adjustment, and in exercise of its powers, including its power to sell the property of the mortgagor to any of the mortgagees or creditors. Another amendment makes it clear that although personal liability for moneys owing under a mortgage is discharged the mortgagee does not thereby lose any of his rights against tho land itself. A commission is now enabled to raise moneys for any purpose that would increase the value of the applicant’s farm lands. An important provision is made regarding the personal covenant. If a mortgagee does not serve the guarantor (who includes the mortgagor, who is not now the owner of the property) before December 31, 1936, with notice that he holds him liable as guarantor, and stating that the . guarantor can make application for adjustment not later than January 31, 1937. the liability of the guarantor is entirely discharged. If the mortgagee does serve this notice, the guarantor is liable under the guarantee, and unless he applies before January 31, 1937, for adjustment of his liabilities he will lose the protection of any of the relief legislation. The discharge of a guarantor does not affect the mortgagee’s rights against any land secured in his mortgage. An amendment extends the last date on which applications for relief can be made from December 31, 1936, to January 31, the Court of Review having power to extend the date still further to February 28. A new clause protects the mortgagor, lessee, and guarantor from action by a rating authority to sell or lease a property for arrears of rates, and protection is extended to the mortgagee or lessor for the period until January 31, 1937, or the finish of the adjustment. Applicants to the court are still restrained from disposing of their property or of obtaining credit without disclosing the fact that they are applicants, but an additional offence is provided if an applicant does not fulfil this obligation, and he will be liabe to the penalties to which he would be liable under the Chattels Transfer Act, 1924. The commission will now have power to cancel or vary orders on milk cheques, and similar assignments executed before or after the passing of the Act. Where a property which has been subject to adjustment is occupied by a tenant who is lessee or mortgagee in possission, the court is empowered to order possession to be given to the mortgagee. The tenant will retain any protection he has under the Fair Rents Act. Many applications have already been

made for the revaluation of rural Crown lands, and the Bill has been amended to provide that such applications for revaluation shall be deemed to be applications under the Bill. A provision has been embodied restricting the sale of land in respect to which an adjustment has been made, and without the special leave of the court, no sale may be made before January 1, 1941. In granting leave to sell a property, the court may require the mortgagor to pay into court such portion of the sale price as the court thinks equitable, having specially in view the improvements made to the land since the date of adjustment; and this money is to go to the creditors. The previous legislation omitted to embrace family protection orders, and orders for alimony, where the terms of the deed, etc., were modified on the grounds that there was hardship to the person making payment. The Bill extends the date under which this provision operates to March 31, 1937, and brings these orders into line with similar orders. The court is given power to vary pooling agreements made before the 1933 Act, still in existence, in the same way as it can vary orders. The court is also empowered to vary orders made under the 1933 Act. A new provision is included by which a trustee or provisional trustee appointed under the 1935-36 Act is retained in office. Mr Coates took exception to the policy of the Government in making changes in various bodies in order to favour its friends. He urged that in the interests of sound administration there should be no interference with the mortgage adjustment committees. Mr Nash said the whole test was competence, and there would be no changes except on those grounds. The Government must have the right to control those appointments. A division was called on the subclause providing that members of the court should vacate office on the passi ing of the Bill. Air Coates- moved to have the subclause deleted, but it was retained by 41-13. Mr Poison moved an amendment to delete the clause which abolished the mortgage adjustment commissions. The luncheon adjournment was taken.