QLD Liens against property

Discussion in 'Property Law Forum' started by Wolfgang Fitznar, 1 March 2019.

  1. Wolfgang Fitznar

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    A property is used as loan collateral with a bank. If another party places a lien on that property are they able to force a sale of that property?
     
  2. Rob Legat - SBPL

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    I take it by 'lien' you're referring to a registered mortgage? If so, any registered mortgagee can start the power of sale process. In practice, second mortgagees generally either don't do it or do it with an abundance of caution because the first mortgagee's interest gets paid out as a priority after covering the actual costs of sale. If there's no money left after that, the second mortgagee gets nothing.

    The process of sale is also quite prescripted. Although it is intended to obtain fair market value, it often doesn't in practice.
     
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  3. Wolfgang Fitznar

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    I think the correct term is caveat, which is not a mortgage. The caveat would be put in place by a party to calm monies owed them by the property owner.
     
  4. Rob Legat - SBPL

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    Okay, if it’s a caveat that’s a different matter. The person would first need to convince the Registrar that they have a sufficient interest to lodge a caveat (unless it is a consent caveat). You can’t just lodge a caveat because someone owes you money - it must support a claim or interest in the land.

    If one is lodged (without the owner’s consent), the owner can serve notice on the caveator a notice requiring them to commence court action in support of the caveat. If they don’t the caveat can be ‘lapsed’ and automatically withdrawn by application to the Registrar of Titles.

    Either way, a caveat does not support a power of sale. And it would still be subject to the interests of a prior mortgage.
     
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  5. Tim W

    Tim W Lawyer
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    This is the key point to remember.
    Lots of people misunderstand this.
    People who are (or claim they are) owed money make this sort of threat all the time.
    Caveats simply don't operate to place one creditor ahead of another.

    Have a read of this.
    A good discussion of what caveats are, and are not, is here.
    You may also find an archive search helpful.
     
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  6. Wolfgang Fitznar

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    Thank you Rob. That is the information I am was seeking.
     
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