Posted by Neeru Kesry on December 8 2020 in News

As from 16 May 2020, temporary law changes were made to assist mortgagors facing financial hardship due to the impact of the Covid-19 pandemic.

The changes made to the Property Law Act 2007 included the insertion of new sections 120A to 120E as part of the Covid-19 Response (Further Management Measures) Legislation Act 2020 to give mortgagors, amongst other things, more time to meet their payment obligations and remedy any specified default before a mortgagee can take enforcement action. The changes relating to mortgages is applicable to all mortgages, including residential and commercial, regardless of whether the mortgaged property is tenanted, and those mortgages relating to goods (such as a business’s assets other than land and buildings).

Section 120(1)(c) of the Property Law Act 2007 currently states that lenders must give notice of a period within which the mortgagor must remedy the default or cause it to be remedied, being not shorter than  20 working days’ notice before they use their powers under the mortgage to take possession of, or sell, the mortgaged property. The temporary law changes now extend that period to 40 working days for notices served after 1 April 2020. This will ensure they apply to all mortgagors affected by the measures taken to respond to Covid-19.

Whilst the temporary law changes may assist mortgagors to survive the Covid-19 situation and temporary financial hardship, it does not alter their payment obligations under the mortgage. It will, however, give mortgagors more time to remedy breaches or defaults.

This is a temporary change to provide relief to mortgagors affected by the response to Covid-19 and the law will return to the current timeframes in the Property Law Act 2007 six months after the end of the Epidemic Preparedness (Covid-19) Notice 2020. The current notice expires on 23 December 2020 (unless an earlier expiry date is notified, or the notice is renewed). So, six months thereafter being 23 June 2021.

If your mortgage is affected by Covid-19 and you have been served with a notice of overdue mortgage repayments by your mortgagee, or if you are a lender who is considering taking enforcement action against a mortgagor and need any advice on issuing notices under the Property Law Act 2007, then please contact us for further assistance.

Richard Hatch | Partner |
Neeru Kesry | Senior Registered Legal Executive |

This paper gives a general overview of the topics covered and is not intended to be relied upon as legal advice.