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Rules of Practice 1994 (S.R. 1994, No. 229)
Requested:  29 Apr 2017
Consolidated as at:  17 Mar 2006

Division 1 - Mortgages and securities

62. First mortgage

(1) A first mortgage is a mortgage that has priority over any other encumbrance or over any charge, other than a statutory charge, in respect of the land to which it relates and under which the amount advanced does not at the time of any advance under the mortgage exceed –

(a) two-thirds of the security valuation if the mortgage is not insured; or

(b) 90% of the security valuation if the mortgage is insured in respect of so much of the amount advanced as exceeds two-thirds of the security valuation; or

(c) 50% of the government valuation in force at the date of the mortgage if there is no security valuation.

(2) If the amount secured under a first mortgage does not exceed the limits specified in subrule (1), a mortgage includes a further mortgage or further charge between the same parties in relation to the same estate if no other creditor of the mortgagor has priority over the claims under the further mortgage or charge by reason of any other encumbrance or any charge that is not a statutory charge.

63. Second mortgage

(1) A second mortgage is a mortgage –

(a) that, if deferred, is deferred only to a first mortgage; and

(b) under which the amount secured, together with all money secured under any first mortgage, does not exceed –

(i) 80% of the security valuation if the mortgage is not insured; or

(ii) 95% of the security valuation if the mortgage is insured in respect of so much of the amount advanced as exceeds 80% of the security valuation; or

(iii) 70% of the government valuation in force at the date of the mortgage if there is no security valuation.

(2) If the amount secured under a second mortgage does not exceed the limits specified in subrule (1)(b), a second mortgage includes –

(a) a mortgage that has priority over any other encumbrance and over any charge, other than a statutory charge, under which the amount secured exceeds the proper valuation limits for a first mortgage; and

(b) a further mortgage or further charge between the same parties in relation to the same estate if no other creditor of the mortgagor who is deferred in priority to that second mortgage has priority over the claims under the further mortgage or charge by reason of any other encumbrance or any charge that is not a statutory charge.

64. Contributory mortgage

A contributory mortgage is a first or second mortgage, the principal sum of which is –

(a) recorded in the accounts and records of a fund operator as being held wholly, in one or more specific parts, for one or more identified investors; and

(b) invested in accordance with the authority of that or those investors.

65. Securities

(1) Securities are assets arising from the application of money for investment.
(2) Securities do not include –

(a) assets arising by their deposit or investment with an approved institution; or

(b) assets to be held by, or in the name of, an investor; or

(c) assets to be held by one or more members of a firm, or a body corporate which is not a fund operator, as bare trustee for an investor in accordance with an authority in writing signed by the investor and on behalf of the firm or body corporate identifying the assets and specifying the terms and conditions on which the assets are to be held.

66. Security valuation

A security valuation is to be made in writing by a registered valuer not earlier than 3 months before the date of the first mortgage or second mortgage on the security of which money is advanced to the borrower.



CURRENT VIEW: 31 Dec 1994 - 1 Oct 2016
VIEW THE AS MADE VERSION