Queensland has fully electronic titles with no passwords or keys. Lodgement of mortgages in Queensland can still be made in paper form, but must lenders choose to lodge via the titles electronic lodgement system or via PEXA.
The Property Law Act 1974 (“QLD Act”) states that a first mortgagee cannot prevent the registration of a second mortgage and may not treat it as a default, irrespective of what its security states. Consequently, the consent of the first mortgagee is not required.
Queensland law therefore requires some unique considerations by lenders:
As a second mortgagee:
• You are not required to obtain the consent of the first mortgagee and can simply lodge your second mortgage in paper form or via PEXA without contacting the first mortgagee and without fear of default.
• A deed of priority is not required unless you wish to increase your protection from that afforded in the QLD Act
As a first mortgagee:
• You cannot stop the registration of a second mortgage, treat it as a default or demand a deed of priority.
• A second mortgage could be lodged without any notice to you.
• You may be forced to exercise power of sale if the second mortgagee will not discharge their mortgage on a sale of the property by the borrower.