Victoria has fully electronic titles and only accepts lodgements electronically via PEXA.
The Transfer of Land Act 1958 (“VIC Act”) obliges the first mortgagee to present a certificate of title to enable registration of a subsequent mortgage, and this has been translated, in the context of electronic titles, to the need for the first mortgagee to be a party to the PEXA workspace and provide a ‘Nomination’.
Whilst the first mortgagee cannot refuse to provide a Nomination, the VIC Act stops short of stating that the first mortgagee may not treat the registration of the second mortgage as a default. Consequently, similar to SA, second mortgage lenders in Victoria are encouraged to actually obtain the consent of the first mortgagee unless they wish to risk a default on the first mortgage.
VIC laws imply some unique considerations for lenders:
As a second mortgagee:
• You are at liberty to lodge a second mortgage but may only do so via PEXA and you will need to invite the first mortgagee to provide a Nomination.
• 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 because delivery of the Nomination of itself does not mean consent.
• You may be required to sign a deed of priority in order to gain that consent.
As a first mortgagee:
• You cannot stop the registration of a second mortgage and will need to engage on the PEXA workspace and provide your Nomination if requested.
• However, if your mortgage terms stipulate that the borrower cannot grant further encumbrances you may still 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.