A common provision in a Real Property Mortgage contract, is that “you must pay on time all amounts for which you are liable as the owner of the property, including rates, taxes and shared scheme levies.”
A Mortgagee Letter is a letter sent to a financial institution that holds a mortgage over a property that is in arrears. It advises them of the amount owed for rates and that a Judgement has been obtained.
It asks if the financial institution is able to pay the debt owing or if the financial institution is taking action in relation to the mortgage. The financial institution will respond that they are not able to pay the rates, will pay the rates owed or are taking action to repossess the property. The financial institution may contact the ratepayer to discuss the debt owed and if they will pay the debt owed. If the financial institution does this, they will increase the mortgage by the amount it pays.
To enable for this to occur, a council requests a Title Seach to determine whether a mortgage is held over the property and then passes this information onto its debt collector to issue the letter.
The process of writing to the mortgagee and recovering the debt is a cost-effective alternative to proceeding with the seizure of goods, bankruptcy, or the sale of land for unpaid rates.
Interested in hearing if you are using Mortgagee Letters as part of your debt collection policy and procedure and how do you manage this in compliance with the Privacy and Personal Information Protection Act, 1998, Government Information Public Access Act 2009 and the Council’s Privacy Management Plan.
I note that under section 715(1)(c) and (d) of the Local Government Act 1993, allows council to identify and notify financial institutions, “as any person who has an interest in the land”, of council’s intention to sell land for unpaid rates, but this does not extend to normal debt recovery activities.
Cheers
Anthony Egan
Coordinator Revenue
anthonyegan@gunnedah.nsw.gov.au
0459 926 261
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