South Australia has fully electronic titles with no electronic passwords, and on this basis a second mortgage may be lodged, in paper form or via PEXA, without any contact with the first mortgagee.
That said, the Real Property Act 1886 (“SA Act”) is silent on the rights of a first mortgagee to treat the
registration of further encumbrances as a default so, notwithstanding the ease with which a second mortgage may be registered in SA, a default of the first mortgage security may arise if the first mortgage restricts further encumbrances and the mortgagee does not approve of the second mortgage registration.
SA law therefore implies some unique considerations for lenders:
As a second mortgagee:
• You are at liberty to lodge a second mortgage at any time in paper form or via PEXA without needing to contact the first mortgagee.
• However, unless you are prepared to risk default on the first mortgage, you should enquire and ensure the first mortgagee actually approves of your second mortgage.
• You may be required to sign a deed of priority in order to obtain the consent.
As a first mortgagee:
• You cannot stop the registration of a second mortgage, which could be done without your knowledge or any notice to you.
• You should ensure that your mortgage terms stipulate that lodgement of further encumbrances without your consent will be a default, so that you can treat a second mortgage registration as a default if the situation warrants it, and in such case you could require a deed of priority as a condition of approving the second mortgage.