Mortgagees

Ferguson & Moyes Lawyers

MEMORANDUM

TO: Mr Ferguson, Partner

FROM: Ms Smith, Law Clerk

SUBJECT: Advise on Antonio’s Mortgage

INTRODUCTION

Antonio has recently returned from vacation to find that Shylock has taken possession of his property as mortgagee. Shylock became mortgagee after Leonardo, the brother to Antonio’s employee, fraudulently signed a mortgage to borrow $50,000.

JURISDICTION

As the events happened in the Gold Coast hinterland, Queensland law will apply.

MORTGAGES

A mortgage is the lender’s interest in property, for securing money or money’s worth, secured over the property of the borrower. It operates as a contract, and as a charge on the land. If the mortgagor (person borrowing the money and in this case Leonardo, fraudulently acting as Antonio) defaults on the loan, the mortgagee (person lending the money, and in this case Shylock) is a secured creditor. The mortgage however, must be registered for the debt to be secured.

Upon the mortgage being registered, Shylock, as the mortgagee, appears to have obtained the benefit of indefeasibility.

INDEFEASIBILITY

The indefeasible title for a lot is the current particulars in the freehold land register about the lot and is protection under statute for persons in possession of indefeasible title.

INTERESTS AND PRIORTY

Shylock’s rights would be subject to Antonio’s, however they both have an interest in the farm.

Antonio, as the owner would have equitable and legal interests in the land, and Shylock, as the mortgagee, has a legal interest in the land.

In Frazer v Walker, Mr and Mrs Frazer were the registered proprietors of a farm in Auckland. Mrs Frazer obtained a loan from Mr and Mrs Radomski on the security of a mortgage over the farm, and forged her husband’s signature on the relevant documents. The mortgage was registered and upon Mrs Frazer failing to make payments, the Radomski’s exercised their power of sale over the property, by...