We have advised some of the major aggregators in relation to their agreements with lenders on their lender panel, assisting to ensure minimisation of risk.
We have also drafted aggregation agreements for major and minor aggregators, as well as sub-aggregation agreements for those brokers groups who want to take the step into aggregation.
We draft the agreements to make them as fair and marketable as possible, whilst ensuring your interests are protected and risks are minimised.
We understand the industry very well and can quickly develop aggregation agreements suitable to the specific needs of the aggregator or sub-aggregator.
The Australian government has made it mandatory for all reporting entities to have an AML/CTF program that deters money laundering and terrorism financing. It must be written and comply with the latest requirements under:
- Domestic standards set out under Part 7 of the AML/CTF Act (2006);
- International standards and recommendations set out by the Financial Action Task Force.
Section 5 of the Act defines a reporting entity as:
“A financial institution, or other person, who provides designated services”.
A designated service includes financial services provided by an ADI, a bank, a building society, a credit union, lenders and an assignee of a lender, a financial lease, a trustee, or a person specified in the AML/CTF Rules.
The Program involves a two step component. The first (known as Part A) is the obligation on a reporting entity to have procedures that identify and prevent the risk of money laundering and terrorism financing. This must be monitored and regularly reviewed and updated. The second (known as Part B) is the obligation to have customer due diligence, specifically to verify the identity and information provided by a customer.
There are three types of Programs for reporting entities to choose from. These are the standard, joint and special Program. Each Program is suitable for a different type of reporting entity (depending on its nature, size, complexity, and risk of ML/TF) and has different review requirements. This means that not every Program will need to satisfy both the Part A and Part B components mentioned above.
Bransgroves Lawyers specialise in setting up and conducting formal reviews of AML/CTF programs. The pricing of our annual reviews is extremely competitive and begins at $1,200 plus GST.
Asset Protection Mortgages
Asset protection mortgages, in conjunction with discretionary family trusts, legitimately absorb all available equity in the family home, or other protected real estate, leaving nothing available for creditors.
In order to be effective (to take the accumulated equity out of the reach of creditors) the model, the deeds utilised, and the customisation to the circumstances of the protected parties, must be set up by a highly knowledgeable mortgage and trust (Equity) lawyer.
Our asset protection model utilises proprietary intellectual property developed by our senior partner, Matthew Bransgrove, over many years and constantly refined in light of recent case law and statutory changes.
Mr Bransgrove is acknowledged as the leading expert in mortgage law in Australia, having published multiple textbooks and academic papers on the subject. His system, together with our acute analysis of your circumstances, allows us to tailor a package which is optimised for both effectiveness and accounting simplicity.
The advantages of the Bransgroves asset protection mortgage model, over a standard discretionary family trust, are:
- The family home continues to benefit from land tax and capital gains tax exemptions.
- There is no transfer involved and thus no stamp duty payable.
- The discretionary trust is revenue neutral meaning there is no ongoing need to lodge separate tax returns.
- The family home can be sold and another one bought without incurring stamp duty or losing the benefit of the accumulated protection.
- We recommend the Bransgroves asset protection mortgage to professionals and self-employed persons to ensure that the house they plan to painstakingly pay off, and the equity they have already accumulated, is not lost as a result of mischance or business failure.
To find out more contact us today.
Banking and Finance
Bransgroves has led the field in acting for lenders on advances, enforcement and priority disputes for over ten years. More recently the firm has become well known for taking the side of mortgage originators and aggregators in their disputes with wholesale funders.
We act for brokers on a variety of matters.
We have found the number of brokers wishing to establish themselves on their own, and obtaining their own accreditations is increasing. We advise them on the best way to leave their sub-aggregator / franchise so they can become a direct member of an aggregator. We then advise on the various aggregation agreements and the importance of ensuring that trail will continue after termination.
For a bigger broker company we advise on and draft sub-brokerage agreements so that they can expand and have their own subcontractors.
We also advise brokers working in the commercial / private lending sphere on their brokerage agreements / mandates and ensuring payment of fees.
We also work extensively in mortgage related litigation and have acted for brokers in defending claims by banks or in relation to commission disputes.
Our solicitors have decades worth of experience in running commercial disputes and litigation of almost any nature, particularly in the superior courts of New South Wales and the Federal Court of Australia.
We understand that litigation can be a trying experience for our clients and we aim to solve your disputes and run your litigation in the most proactive, commercially sensitive and cost effective way possible. Where possible, we try to reach a commercially satisfactory resolution of the dispute before going to trial.
We have longstanding working relationships with some of the most skilled and well respected counsel and senior counsel in New South Wales so that our clients are always the best represented they can be at trial.
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We understand that construction disputes involve complex technical and factual issues, voluminous documents, and often many parties and a long project history. We understand that our clients cannot afford a legal free-for-all, with disastrous financial consequences for projects, firms and guarantors. To eliminate this we carefully balance theoretical legal rights with the realities of the situation and help our clients devise strategies to short-circuit potential disputes and bring about optimal settlements for our clients. Our construction documents recognised as the most flexible and meticulous in the industry are used by over 30 lenders for large and small construction loans.
Matthew Bransgrove is an expert on the External Dispute Resolution regime which applies to Australian lenders. He was commissioned by lenders with combined loan books of $5.3 billion, to draft a petition addressed to the Parliamentary Joint Committee on Corporations entitled “Why the External Dispute Resolution regime is hurting capital availability in Australia”. The 2013 Lexis Nexis textbook The Essential Guide to Mortgage Law in Australia contains a chapter on External Dispute Resolution written by Mr Bransgrove.
Every bank and every lender involved in consumer lending must hold an AFSL. Every holder of an AFSL must be a member of an External Dispute Resolution Scheme (“EDR”). There are two External Dispute Resolution schemes: the Financial Ombudsman Scheme (“FOS”) and the Credit Ombudsman Service Limited (“COSL”).
In April 2011 ASIC brought out Regulatory Guide 139, entitled Approval and oversight of external dispute resolution schemes. In this document ASIC set out certain mandatory requirements for inclusion in the terms of reference of all EDR schemes. RG 139 introduces a revolutionary principle which amounts to a de facto mortgage moratorium. Paragraph 72 states:
The Terms of Reference of an EDR scheme must require that legal proceedings by scheme members should not be commenced where a complaint or dispute has been lodged with the scheme.
Paragraph 77 goes on to state:
Where legal proceedings that relate to debt recovery proceedings have already commenced and a complainant or disputant takes their complaint or dispute to an EDR scheme, the Terms of Reference must require the member not to pursue the legal proceedings beyond the minimum necessary to preserve its legal rights.
Bransgroves Lawyers can assist in resolving these complaints quickly and efficiently utilising our in-depth knowledge of EDR Terms of Reference and jurisdictional issues.
For over twelve years we have led the field in acting for lenders on mortgage advances in NSW. Since 2012 we have been acting on advances in all states and territories.
From the multi-million dollar complex constructions loans to straight forward advances and caveat loans our service is always superlative. Our pricing is extremely competitive and our work careful and precise. Our specialisation and our automated document production allow us to be lightning fast in our turn around for producing documents and performing due diligence.
Our rigorous systems, procedures and constantly tweaked checklists ensure the highest quality service. Our expertise in suing other solicitors who have negligently performed mortgage advances, serves to keep us constantly on our toes.
Loans involving multiple securities, multiple tranches, multiple states, multiple guarantors, multiple borrowers, multiple trusts with multiple beneficiaries, and multiple charges over encumbered companies by syndicated lenders are par for our course. We are particularly skilled in documenting construction loans.
Many of our clients are mortgage funds run by solicitors or ex-solicitors or institutions with in-house lawyers. Despite having the qualifications to act for themselves, they know that when a matter is complex, or high value, it is quicker and safer to use our services.
Matthew Bransgrove used his vast experience in mortgage law to write chapters in his mortgage law textbooks on mortgage drafting. This involved reviewing the security documents of all the major lenders in Australia and considering the last 10 years of case law on questions involving mortgage drafting.
In 2001 Matthew drafted his first comprehensive mortgage memorandum and complimentary suite of ancilliary documents. These documents have been punctiliously revised over the subsequent years. Whenever there are cases which significantly impact on the rights of lenders, these state of the art security documents are updated and constantly refined. We use these documents for mortgage advances carried out by this firm. We also license our security documents, at reasonably rates, to lenders to be used by other solicitors or in-house. These documents are based on battle-hardened (court tested) and refined over many years.
We act as consultants in designing in-house procedures, including precedents and underwriting checklists, for lenders who issue their own mortgage documents.
Mortgage Due Diligence
Anyone can lend money out, but the test of diligence is in recovering it undiminished. Mortgage enforcement is one of the primary focuses of our practice, our daily exposure to the twists and turns of contested mortgages constantly hones our skills and provides us with a knowledge-base for advising clients on mortgage due diligence procedures.
Recent decisions under the Contracts Review Act and the National Credit Code cases have found that failure of a lender to adhere to its own procedures can result in the loan being found unjust. Moreover, recent valuation decisions have found that lenders will be punished severely in the calculation of contributory negligence if they breach their own procedures. Bransgroves can help identify what procedures will genuinely assist in loss prevention while at the same time ensuring the lender is not set up to lose a challenge mounted under the Contracts Review Act and the National Credit Code or s137B Competition and Consumer Act 2010 or in proceedings against valuers.
Lenders using our services for the first time will find that no fact situation or legal dilemma gives us pause because we have seen it all before and are geared to act quickly and cost effectively. The sheer volume of mortgage enforcement work means that even our junior solicitors have more experience in this field than partners at other firms.
The advantages of this specialisation are not limited to expertise. Typically, we have multiple matters in the possession list; this means that there are significant cost savings as attendance costs can be spread over multiple matters.
Our clients also find that interlocutory applications, such as applications for summary judgment, are for the most part dealt with in-house, reducing the need to retain barristers.
The familiarity our solicitors have with the quirks and peculiarities of the individual registrars and associate judges ensure that all the documents they require are available and, so applications do not have to be adjourned.
We are experts in the field of establishing and maintaining mortgage investment schemes. Our skills in drafting mortgage documentation dovetail with our skills in drafting constitutions, Product Disclosure Statements, Information Memorandums, lending manuals, compliance plans and other mortgage scheme documents to ensure that your mortgage scheme is efficient and compliant.
If an AFS licensee has a wholesale licence only, it can only raise money from wholesale investors. The main categories of wholesale investors are:
- Those who invest $500,000 or more.
- Those who control $10m of assets or more.
- Those who can provide an accountant’s certificate stating that they meet one of the following:
- They have net assets of $2.5m or more, or
- They have a gross income for the last 2 years of $250,000 or more.
Note – in certain circumstances entities controlled by a person that meets the asset or income test can be aggregated together.
Any investor that is not wholesale is retail. As noted above, a holder of a wholesale AFS licence can only raise money from wholesale investors. But the NTA requirements for the licence are low (a mere surplus of assets over liabilities only is required). The only other real solvency test is that the licensee shows it has necessary cash flow to meet its business needs over the next 6 months at all times.
A wholesale licensee cannot issue a PDS or Prospectus. It can only issue information memoranda.
A full retail licence is usually referred to as a ‘responsible entity’ licence. It’s still a form of AFS licence. This licence allows:
- The licensee to be the responsible entity (trustee) of a registered managed investment scheme.
- Raise unlimited $ amounts from both retail and wholesale investors via Product Disclosure Statements.
It carries with it onerous NTA requirements, which are the greater of:
- 0.5% of the average value of scheme property of the registered schemes it operates (up to $5 million), and
- 10% of the average responsible entity revenue (as defined) (with no maximum).
Also, registered managed investment schemes are higher cost than unregistered ones – they need a compliance committee and a full annual audit and potentially a six month audit review.
There is an AFS licence for clients that is basically wholesale but with limited ability to raise money from retail investors.
Sections 708/1012E of the Corporations Act allow a licensee to raise up to $2m every 12 months from up to 20 retail investors by way of ‘personal offers’ to retail investors (the 20/12/$2m rule). Unlimited personal offers can be made but only 20 acceptances every 12 months.
The benefit of such a licence is that it does not carry the NTA requirements of a responsible entity AFS licence. The downside is that the licence does not permit PDS’s or Prospectuses to be issued, only information memoranda.
National Credit Code
Our solicitors have a commercial and practical understanding of the operational challenges facing lenders in an ever-changing regulatory environment. By combining our detailed knowledge of the regulatory environment with a strong understanding of your business our lawyers can help your business meet its regulatory and prudential challenges at minimum cost and with optimal commercial results. This allows us to reliably and efficiently advise our lender clients on documenting and underwriting coded loans, avoiding coded loans and enforcing coded and allegedly coded loans.
Parent Child Mortgages
With property prices so high it is difficult for first-time home buyers to enter the property market. Parents are often called on to help out with the deposit. If the first home buyers are a young couple Mum and Dad are naturally concerned with the possiblity that if the relationship fails the equity in the property, including that represented by the parents’ contribution will go partly or wholly to their child’s former partner.To avoid this problem Bransgroves Lawyers recommend the contribution be loaned by the parents to the young couple and the loan be protected by a mortgage. The advantage of this arrangement is that if the property has to be sold and the proceeds split the parents will get their contribution back before their child’s former partner gets anything.
Personal Property Securities
The Personal Property Securities Act 2009, which commenced at the beginning of 2012, change the way in which interests in personal property were dealt with, including the fixed and floating charge. Many business have found that interacting with the new regime is complex and have sought our skills and expertise.
Our mortgage documents grant an interest in all personal property and further, provide for charges over specific personal property. We act to ensure our clients’ security interests are properly perfected and registered under the regime.
We have also helped lenders understand the changes to the regime and implemented to changes in practice to accommodate the Personal Property Securities Act.
Mortgage priorities can be treacherous. Bransgroves not only have the skills to protect lenders at the documentation stage but can also help structure workable arrangements once disputes have arisen.Most priority disputes occur when lenders stumble blindly into a situation without recognising that there are priority implications. Our consultancy work can help lenders develop procedures to recognise priority traps and pitfalls.
By virtue of our extensive involvement in mortgage enforcement over the last twelve years Bransgroves has acted in many of the leading cases in relation to property law. All our partners contribute extensively to the academic literature on property law through our College of Law papers and our article in the Law Society Journal.
Whatever your property related dispute, Bransgroves will be able to identify the crux of the dispute and formulate a strategy to extricate you as efficiently and successfully as possible. Our legal expertise enables us to achieve outcomes for our client, in most cases through the use of interlocutory applications that effectively dispose of the dispute, avoiding the need for a full-blown trial.
- Compensation from the Torrens Assurance Fund
- Constructions loans
- Contracts for the Sale of Land
- Correction of the register
- Crown leases
- Equitable mortgages
- Farm Debts Mediation Act
- Injunctions to restrain sale
- Insolvent registered proprietors
- Joint tenancies
- Joint ventures
- Judicial sale
- Life estates
- Negligent conveyances
- Negligent valuation
- Notices to Complete
- Purchaser’s lien
- Rescission of contracts for sale
- Restrictive covenants
- Right to possession
- s66(G) applications
- Stamp duty
- Strata title
- Tenancies in common
- Vendor finance
- Writ of possession
We specialise in acting for brokers and originators whose trail has been cut of or is threatened.
Many clauses in origination and aggregation deeds that claim to give the right to seize trail are unenforcable, including onerous indemnity clauses. We have also developed various effective defences based on contractual arguments derived from the wording of the deeds themselves as well as the practices and waivers adopted by the parties themselves.
We have run several cases for those who have had their trail commission stopped and seized by funders. Our extensive experience in the mortgage industry means that we are familiar with all the issues surrounding these claims. This includes the structure of the relationships between brokers, aggregators, lenders’ mortgage insurers, originator-funders, and lenders. Our extensive experience suing valuers gives us unique insight into the potential proportionate liability of valuers, solicitors, brokers, and borrowers.
Most contracts allowing for the seizure of trail are void as penalties and in all cases we have been able to negotiate settlements-sometimes, if the aggregator is stubborn and poorly advised, only after commencing proceedings.
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We have been suing negligent valuers for 10 years. During that time we have developed unrivalled expertise in analysing valuations and correctly assessing the prospects and quantum of success. Matthew Bransgrove has presented a paper on valuer liability for the NSW College of Law.
Since the GFC we have acted on over 20 valuer negligence matters and none have gone to trial–all have settled favourably for the lender. This is testament to our thorough and skilled case preparation. As a rule, valuer’s insurers will never settle unless they are convinced that they will lose if the matter goes to trial and that the lender is determined and ready to go to trial. Thus everything depends on putting together a credible case and proceeding towards trial with the intention of litigating.
Our initial approach is to assist you in quantifying your damages and assessing the strength of your case. This initially involves examining the legal issues and if they are in order, commissioning an expert retrospective valuation. Once we are convinced you are going to win and the damages recoverable are worthwhile, we file proceedings. Typically we file in the Federal Court and typically we have settled the matter within 6 months of filing.