21 February 2012
We have found a number of clients asking what letter or documents they will need to provide upon a partial or full release of security property and any action needed to be taken by them to remove the sold security from the register and likewise what they should receive from any outgoing secured party when a they start a new loan.
Answer: In terms of the second question, there is no equivalent to a discharge of mortgage form which can be registered under the PPSA. S 163 of the PPSA provides for when registration over a piece of collateral ceases to be effective. Sub-section (1)(a) provides that registration ceases at the registered “end time”, whilst (1)(b) provides that registration ends when the registration is amended to omit the collateral description. “End time” is one of the matters specified in the form I attach (and in its equivalent dealing with collateral that carries serial numbers), and “collateral description” is another item on the form. The form to amend a registration is the same form required to be lodged to register in the first place (in the present case, the form I attach). Thus in order to cancel the registration of a security interest one would file the attached form filled out in a similar manner to the way in which it was completed on registration, save with the collateral description omitted. If the security is being amended to merely discharge the charge over a particular item of collateral, then the amended form would specify the remaining collateral but would omit from the description the item no longer charged.
In addition to obtaining from the previous lender a signed copy of the Application or Registration Prescribed Property filled out so as to omit the collateral with which the incoming lender was concerned, the incoming lender would require a written acknowledgement by way of deed that there had been a discharge of the charge over the collateral in question. This deed would not be registered, but retained as evidence in case of any later dispute.
Matthew Bransgrove holds a Bachelor of Laws and was admitted to the NSW Supreme Court in 1992. He has presented over fifteen papers for the NSW College of Law on mortgage related topics. He is a co-author of the 2008 LexisNexis textbook ‘The Essential Guide to Mortgage Law in NSW’. He has written ten articles for the NSW Law Society Journal. His articles in the NSW Law Society Journal and his textbook have both been cited with approval by the NSW Supreme Court. He has practised exclusively in the field of mortgage law and mortgage related litigation since 1998.