on 12-09-2018 11:59 AM
We act for a purchaser who, in addition to the new property she is purchasing, is also providing another unencumbered property as security for a mortgage.
The client has handed the paper title for unencumbered property to the incoming mortgagee.
The incoming mortgagee has added this second title in to the PEXA matter.
My question is, does the incoming mortgagee now hold the right to deal with the unencumbered title as the client has handed it to them?
Does this mean the incoming mortgagee is authorised to create the CORD Consent in the PEXA matter for that title?
on 13-09-2018 03:13 PM
Great question! Technically no, the incoming mortgagee does not have right to deal as they are not on title. I would think that the more appropriate way to do this transaction in PEXA would be for you to create the consent on behalf of the client as the client is still on title with right to deal. Assuming bank would then place a mortgage over that title in the workspace. Of course you will need to get the title back off the incoming mortgagee to facilitate that.
For further clarification, you might like to contact ORG such as @DavidMcDowell.
on 13-09-2018 03:27 PM
Thanks for your reply. In this case, the matter settled today with the incoming mortgagee (CBA) telling us they were permitted to create the CORD consent in PEXA, which they proceeded to do!
The guidelines on the PEXA help articles in relation to CORD consent state that "To be able to create a Consent document you have to be a Mortgagee on Title, an Incoming Mortgagee or CT Controller."
Under which circumstances, then, would an incoming mortgagee be able to create a Consent document?
on 16-09-2018 02:08 PM
I've done some investigating to get to the bottom of this issue. An incoming mortgagee would normally create the consent in the case of a standalone mortgage or refinance. This is partly due to the fact that a person would not be able to complete their own consent on PEXA and normally not represented by a practitioner for these types of transactions. In this case the individual would provide the paper CT to the incoming mortgagee in order to create the consent.
On the surface, it seemed more appropriate for the practitioner representing the purchaser to consent to a mortgage being placed over the property of their client. However in practice, this might not make sense from a banks perspective and would require a different set of processes depending on the parties involved.
So based on that, I think your bank was quite right to retain the CT and create the consent themselves. Apologies for the differing response on this one. I've discussed this with ORG who have come to the same conclusion also.
Happy transacting and thank you for raising such an interesting issue!
on 02-10-2018 09:32 AM
Does that mean the Incoming Mortgagee who holds an unencumbered paper Certificate of Title has a right to deal and as such has a right to create the Consent in its own right?
We act for the Incoming Mortgagee (Private Lender) and the Borrower has given us the unencumbered Certificate of Title for the purpose of registering a standalone Mortgage. Can we as the legal representative of the Incoming Mortgagee (and not the Borrower), create the Consent for the purpose of registering the new Mortgage? If so, how do we do this? Also, since we are electronically signing the Consent on behalf of the Incoming Mortgagee, are we only required to have a Client Authorisation Form signed by the Incoming Mortgagee (and not the Borrower, who we do not act for)?
on 03-10-2018 12:42 PM
Yes correct. As you are acting for the Incoming Mortgagee, you can create the consent for the land using the title the borrower has provided to you. You will need a Client Authorisation Form between yourself and the Incoming Mortgagee. You would not require a signed Client Authorisation Form between yourself and the borrower if you do not act for them.
I understand you are meeting with your PEXA Direct Specialist today who will talk you through how to do the Consent.