AUSTRALIAN CAPITAL TERRITORY
The Australian Capital Territory has just this year abolished paper certificates of title and joined PEXA so a second mortgage in the ACT may be lodged via PEXA without contacting the first mortgagee.
That said, similarly to SA, the Land Titles Act 1925 (“ACT Act”) is also silent on whether a first mortgagee may treat the registration of the second mortgage as a default if the terms of the first mortgage.
ACT laws imply some unique considerations for lenders:
As a second mortgagee:
• You are at liberty to lodge a second mortgage at any time but can only do so in paper form.
• If a certificate of title is on issue, you will need to contact the first mortgagee to present it.
• Unless you are prepared to risk default on the first security, you should enquire and ensure the first mortgagee actually approves of your second mortgage as production of the title on its own does not mean consent is given.
• You may be required to sign a deed of priority to obtain the consent of the first mortgagee.
As a first mortgagee:
• You cannot stop the registration of a second mortgage and will need to present the certificate of title if asked.
• However, you should ensure that your mortgage terms stipulate that the borrower cannot grant further encumbrances without your consent, so that you can treat a second mortgage registration as a default if there is sufficient detriment, and in such case you could require a deed of priority as a condition of approving the second mortgage.