At one point in life you will be required to borrow money or be advanced credit in some shape or form. Whether it be for the purchase of residential property, commercial property, a business or a simple loan between relatives, most monetary advances will be secured in one way or another.<\/p>\n
A security takes the form of a mortgage when concerning funds for residential or commercial property (known as real property). When non real property is involved a charge is usually recorded over the assets of a person, business or company on the Personal Property and Securities Register.<\/p>\n
What follows is an overview of the types of securities and a simple guide on what to consider when signing any mortgage or General Security Agreement (\u201cGSA<\/b>\u201d).<\/p>\nMortgages In Queensland<\/h3>\n
Most land in Australia is registered under a system known as the Torrens system. Each state and territory operates its own Torrens system (including its own register) for land located in its jurisdiction. Registration in the Torrens system creates title to the relevant parcel of land. Consequently, it is registration of a transfer, not execution of the instrument of transfer that passes title to the purchaser on a sale of Torrens title land.<\/p>\n
The main types of tenure are freehold estates (that is, freehold ownership), leasehold estates and crown land. The relevant state or territory register records details of the land and any registered interests in that land (for example, mortgages, leases and easements).<\/p>\n
An important and fundamental principle of the Torrens system is that the register is paramount, the purpose of which is to save persons from \u201cgoing behind the register\u201d to investigate the history and validity of the title to the interest in land. Accordingly, the registered proprietor of an estate of interest in land obtains what is known as an indefeasible title to its interest. This means title is not defeated by existing defects in title prior to registration or other unregistered interests.<\/p>\n
There are some limited exceptions to indefeasibility, including prior registered interests, fraud, easements and surveying errors, among others.<\/p>\n
Generally, the most common form of security granted over freehold land is a mortgage. Once registered, a Torrens title mortgage operates as a charge on the relevant lot for the amount of debt or liability secured.<\/p>\n
A GSA is a common form of security often used to secure commercial loans or credit arrangements. It can be an effective way to obtain security over the assets owned by a person or company. GSA\u2019s replaced Fixed and Floating Charges when the Personal Property Securities Act 2009 (\u201cPPSA<\/strong>\u201d) came into force.<\/p>\n The PPSA established the Personal Property and Security Register (\u201cPPSR<\/strong>\u201d) on which the securities are recorded. A security interest will be an interest in personal property which secures payment of debts or other obligations. Personal property includes all property that is not real property (land).<\/p>\n When entering into a GSA with your bank or any lender, you or your company will often be asked to provide security over all of your present and after-acquired property, meaning the bank will have security over everything you own now and everything you will own in the future.<\/p>\n A bank could, for example, require a GSA from you or your company to secure loan monies advanced by the bank. A GSA will usually secure all moneys owed to the secured party now and in the future (called \u2018secured moneys\u2019). This will include collateral liability and the costs of enforcement.<\/p>\n When entering into a security agreement with one of your suppliers or for equipment purchases, you will typically provide security over just some of your assets (Specific Security Agreement, often classified as a \u201cPMSI\u201d), usually the assets that they supply to you together with the sale proceeds of such assets.<\/p>\n It is important that you thoroughly read your mortgage\/GSA documents and if you have any concerns, seek legal advice. Some of the important feature of the mortgage\/GSA agreements are outlined below.<\/p>\n It is recommended that you seek legal advice when entering into any major asset acquisition, particularly if mortgage or security documents are involved. This is a brief overview of the application of mortgages and GSA\u2019s, for more comprehensive review of your documents please contact us.<\/p>\n Get the best representation. Contact Ryan Murdoch O’Regan Lawyers’ experienced mortgage and guarantee lawyers on 1800 999 529<\/a>, email mail@rmold.newwebsite.live<\/a> or submit an enquiry below.<\/p>\nKey Considerations for Mortgages & GSA<\/h3>\n
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\n Term<\/strong><\/span><\/td>\n Description<\/strong><\/span><\/td>\n<\/tr>\n \n Lender (mortgagee)\/Secured Party<\/span><\/td>\n Ensure the lenders details are recorded correctly as these are the details of the provider of funds.<\/span><\/td>\n<\/tr>\n \n Borrower (mortgagor)\/Grantor<\/span><\/td>\n Ensure the Borrowers details are recorded correctly as the Borrower is the receiver of funds.<\/span><\/td>\n<\/tr>\n \n Loan amount<\/span><\/td>\n This is the total amount begin lent, this will include any fees or charges by the Lender.\u00a0 It is important to remember that the fees and charges will reduce the total amount, particularly when the funds are to be drawn upon.<\/span><\/td>\n<\/tr>\n \n Loan Term<\/span><\/td>\n This is the duration of the loan, usually set out in months and years in the repayment schedule.<\/span><\/td>\n<\/tr>\n \n Repayment Schedule<\/span><\/td>\n This will detail the amount and frequency of payments.<\/span><\/td>\n<\/tr>\n \n Loan expiry date<\/span><\/td>\n This is the day when the loan will be fully repaid. After this date you should request that the mortgage or charge be removed from title as banks often do not do this on their own.<\/span><\/td>\n<\/tr>\n \n Security\/Collateral<\/span><\/td>\n This will be the property or assets that the mortgage or charge will be registered over to secure the funds.\u00a0 Ensure the property details are correct.<\/span><\/td>\n<\/tr>\n \n Special conditions<\/span><\/td>\n These can include a number of variations to the mortgage or security agreement, particularly in relation to interest rates, default fees and other obligations placed on the Lender or Borrower or both.\u00a0 It is best practice to take note and discuss these with your bank or solicitor before signing the documents.<\/span><\/td>\n<\/tr>\n \n Guarantors<\/span><\/td>\n Often banks require a personal guarantee to also sign the mortgage or security documents, guaranteeing the repayment obligations of the Borrower in the event of a default.\u00a0 It is highly recommended that legal advice be sought before signing a personal guarantee.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n How We Can Help<\/h3>\n
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