When can a mortgagee sell my property?


Buying a property will be one of the biggest investments you will make in your life time.  At the moment times are tough, the cost of living is increasing and interest rates are up.  So if you hit financial difficulties, when can a mortgagee sell your property?
The provisions of the Real Property Act set out the procedure a registered mortgagee must follow if you default on your loan.
Firstly a mortgagee must issue you a notice requiring you to remedy the default.  The notice must notify you that unless the requirements of the notice are complied with in one month, the mortgagee proposes to exercise its power of sale. 
If you comply with the notice within the time set out in the notice, the default to which the notice relates is deemed not to have occurred.
If you do not comply with the notice, then the Act authorises a mortgagee to exercise any number of powers, including the power of sale.  If you own your property in your capacity as a director of a company, the Act authorises a mortgagee to appoint a receiver and allows the receiver to exercise the power of sale.
A mortgagee may sell your property by public auction or by private contract.  The mortgagee is obliged to apply the sale monies firstly in payment of the expenses incurred by the sale; secondly in payment of the moneys which are due or owing to the mortgagee; thirdly in payment of subsequent mortgages (if any) in the order of their priority; and the surplus (if any) to you.
There has been recent controversy about the application of sale monies and the State Government is preparing new laws aimed at preventing mortgagee selling properties at undervalued prices.  We have all heard the recent reports from welfare groups about mortgagee selling properties in haste to recoup money owed under the mortgage and leaving the homeowner with very little, if anything at all.
The proposed amendments aim to place stringent conditions on mortgagees and will make mortgagees accountable if it can be proven that a property was sold for less than market value.  We will report on any new laws relating to mortgagees’ powers of sale in further editions.
In the meantime, if you require advice in relation to your mortgage or your mortgagee’s rights and responsibilities, please contact us on (02) 8296 6222.