This document is a real property mortgage.
Generally, when Banks and finance companies lend money, they require borrowers to provide a form of security to mitigate the risk that the borrower will not be able or refuse to repay the loan amount. Should a borrower fail to repay the loan amount in full or in part, the lender can then enforce its rights under the security. The right to request security is available to all lenders and it is highly recommended that security is sought and secured where the loan amount is substantial.
The most common securities provided in Australia are interests in real property, personal property and guarantees from third parties.
Mortgages of real property
This precedent sets out the basic terms and conditions to be found in real property mortgages. Note that each state and territory has Legislation that governs real property. Therefore, any real property mortgage drafted must comply with the laws of the particular state and territory in which the real property is situated.
Most land registry offices in Australia also have templates for these types of documents which should be incorporated as part of any mortgage in the relevant state or territory.
Importance of understanding real property laws
The laws pertaining to real property can be complex. It is, therefore, important that the drafter has an understanding of these laws. Further, the drafter needs to ensure that they have captured the correct details of the real property to be registered as a security, as well as how to deal with any encumbrances on the property prior to registration of the mortgage should the lender need to enforce its rights under the mortgage.
Far too many times, a lender’s rights to enforce this type of security have been compromised because the mortgage document fails to correctly describe the relevant real property, and the lender has failed to consider the consequences of existing encumbrances on the property.
- Basic loan agreement
- Guarantee of payment of loan
- General security deed
- Amendment and restatement agreement
- Deed of priority
- Forbearance of debt agreement
- Deed of assignment of debt
- Loan agreement checklist
This document has been authored for LexisNexis by Elise Margow, Principal, Legally Speaking.
This document is prepared with the assistance of Specialist Editors Geoff Geha, Partner, Clayton Utz and Karen Lee, Principal and Consultant, Legal Know-How.