Snake Hill Facts

This extract comes from the NSW Real Property Act 1900:

57 Procedure on default

(1) A mortgage, charge or covenant charge under this Act has effect as a security but does not operate as a transfer of the land mortgaged or charged.

(2) A registered mortgagee, chargee or covenant chargee may, subject to this Act, exercise the powers conferred by section 58 if:

(a) in the case of a mortgage or charge, default has been made in the observance of any covenant, agreement or condition expressed or implied in the mortgage or charge or in the payment, in accordance with the terms of the mortgage or charge, of the principal, interest, annuity, rent-charge or other money the payment of which is secured by the mortgage or charge or of any part of that principal, interest, annuity, rent-charge or other money,

(a1) in the case of a covenant charge, default has been made in:

(i) the payment, in accordance with the terms of the judgment to which the covenant charge relates, of the principal, interest or other money the payment of which is secured by the covenant charge, or

(ii) the payment, in accordance with the terms of that judgment, of any part of that principal, interest or other money,

(b) where:

(i) the default relates to that payment, or

(ii) in the case of a mortgage, the default does not relate to that payment and notice or lapse of time has not been dispensed with under section 58A,

a written notice that complies with subsection (3) has been served on the mortgagor, charger or covenant charger in the manner authorised by section 170 of the Conveyancing Act 1919 ,

(b1) where a notice is required to be served under paragraph (b), a copy of that notice has been served (in the manner authorised by section 170 of the Conveyancing Act 1919 ) on:

(i) each mortgagee, chargee or covenant chargee (if any) of the land mortgaged or charged under a registered mortgage, charge or covenant charge which has less priority than that of the person intending to exercise the power of sale, and

(ii) each caveator (if any) who claims as an unregistered mortgagee or chargee to be entitled to an estate or interest in the land mortgaged or charged, and

(c) where such a notice is so served, the requirements of the notice are not complied with within the time notified pursuant to subsection (3) (d).

(3) A notice referred to in subsection (2) complies with this subsection if:

(a) it specifies that it is a notice pursuant to section 57 (2) (b) of the Real Property Act 1900 ,

(b) it requires the mortgagor, charger or covenant charger on whom it is served:

(i) to observe, except in relation to any time expressed in the covenant, agreement or condition for its observance, the covenant, agreement or condition in respect of the observance of which the mortgagor, charger or covenant charger made default, or

(ii) as the case may be, to pay the principal, interest, annuity, rent-charge or other money in respect of the payment of which the mortgagor, charger or covenant charger made default,

(c) if the costs and expenses of preparing and serving the notice are to be demanded, it requires payment of a reasonable amount for those costs and expenses and specifies the amount, and

(d) it notifies the mortgagor, charger or covenant charger that, unless the requirements of the notice are complied with within one month after service of the notice (or, where some other period exceeding one month is limited by the mortgage, charge or judgment for remedying the default referred to in the notice, within that other period after service of the notice), it is proposed to exercise a power of sale in respect of the land mortgaged or charged.

(4) Where a notice is served under subsection (2) (b) and the requirements of the notice are complied with within the time applicable to the notice under subsection (3) (d), the default to which the notice relates shall be deemed not to have occurred.

(5) Without prejudice to any other manner in which it may be deprived of force or effect, a covenant, agreement or condition whereby upon a default referred to in subsection (2) (a):

(a) the whole of the principal or other money of which the payment is secured by a mortgage or charge becomes payable, or

(b) a part of that principal or other money (not being a part to which that default relates) becomes payable,

has no force or effect until the powers conferred by section 58 become exercisable by reason of that default.

 

  So, to sum that up, the lender should have served us with Section 57(2)(b) Notices outlining that our mortgage payments were in arrears and then allow us one month to bring the payments up to date.

  If we didn`t bring the payments up to date within that month, the lender would then have had the right to begin Court proceedings against us to take possession of those properties.

  If the mortgage payments are up to date within one month of these Notices, the lender does NOT have the right to begin Court proceedings to gain possession of the properties.

 

  Unfortunately,

- we were not served with Section 57(2)(b) Notices, and

- the lender admitted that our mortgage payments had been paid in advance up to 6 years earlier, and

- those advance mortgage payments had not yet expired

when they began Court proceedings to gain possession of the properties. 

That`s probably why they didn`t serve us with these Notices. They admitted that they knew our payments were still paid in advance when they sued us.

 

Their letters promising to pay those prepayments toward monthly (future) mortgage payments invalidated the Notices (had there been any) and also invalidated their statement of claim, as they had just created a new contract and they paid the consideration for that contract themselves themselves with the money they had forced out of us up to 6 years earlier.