GUARANTEES: Security for lenders

Published by Law Society of New South Wales

In a recent case, the court of appeal considered a case where a mortgage was varied, lengthening the term, increasing the principal and raising the interest rate, after the guarantors had resigned as directors of the company which had taken out the mortgage. The lender, who suffered a shortfall on the sale of the security, sought to recover from the guarantors.

The court concluded that the variations altered the nature of the guarantors’ obligations. By reason of the increase, the guarantors would have been exposed to a potentially greater risk of being called upon to meet a default by the company of its obligations under the mortgage, “even if their liability was limited to the original sum lent to the  company ($240,000) plus interest”.

Read the rest of this entry »

COMPULSORILY ACQUIRED LAND Claiming loss of profits

Claims for compensation are often made not only by landowners but also by businesses which operate on acquired land.

Many state authorities have the power to compulsorily acquire land for public purposes. The law ensures that compensation is paid for the market value of the acquired land and for ‘disturbance’ to the dispossessed owner.

An ‘owner’, for the purposes of the law, means any person who has an “interest in the land“, which would include, in most cases, any business operating from the land with a lease or similar arrangement. Some public works may also have a short-term impact on a business’s profits.

Read the rest of this entry »

FIRST HOMEOWNER GRANT: Penalties if you don’t meet criteria

Current low interest rates and the increase in the government’s first homeowner grant to $21,000 for a new house purchase may be tempting, but you will have to repay the grant if you do not meet the eligibility criteria.

The residency requirement is that you move into the property within 12 months after completion and live there for a continuous period of six months. Read the rest of this entry »