TOPIC 11 MORTGAGES FEEDBACK TO ONLINE ACTIVITIES ACTIVITY 11.1 EXERCISING POWER OF SALE Development Ltd granted a first registered mortgage dated 1 March 2018 to Giant Bank Ltd over a large tract of vacant land totalling 15 hectares all comprised in a single title. The mortgage is in the terms set out in the mortgage document on QUT Readings and was granted to secure a loan of $2 million. The land is to be used for residential purposes in the future. The $2 million principal was borrowed to undertake infrastructure works on that land like kerbing, channelling and the laying of underground pipes and wiring. Development Ltd has been under financial pressure and is having difficulty repaying the loan. In fact, Giant Bank Ltd had been in constant communication with Development Ltd regarding an arrears of $120,000 principal and interest (comprising four instalments of $30,000 each). Giant Bank Ltd took action and served a Form 4 Notice of Exercise of Power of Sale on Development Ltd on 3 March this year. The covering letter and the Notice are below. You act for Development Ltd. You are instructed that Development Ltd may be able to pay the sum of $120,000 within 30 days, but cannot raise $1,750,500 within that period to comply with the demand. As well, Development Ltd will be unable to remove Tenant Ltd before the expiration of the Notice period. 3 March [this year] To: Development Ltd Please find attached Notice in Form 4 made pursuant to the Property Law Act 1974 consequent upon your default. Please note that Giant Bank Ltd hereby invokes Clause 7.2 (a) and demands the immediate payment of the whole of the principal and interest due pursuant to the mortgage totalling $1,750,500 at the time the Notice of Exercise of Power of Sale expires. Yours faithfully Jack Smith National Credit Manager Giant Bank Ltd
2 PLA Form 4 Version 1 NOTICE OF EXERCISE OF POWER OF SALE Property Law Act 1974, section 84 TAKE NOTICE that default has been made under mortgage (registered no M7860543D) in respect of land described as Lot 78 on SP 523413 in that: — (a) Payments of principal in an amount of $ 100,000 (and interest in an amount of $20,000) then due and owing were not made on the following dates: 7 October [previous year}, 7 November [previous year}, 7 December [previous year} and 7 January [this year] in accordance with Clauses 4.1 and 14.1 of the said Mortgage AND further take notice that, unless within 30 days of service upon you of this notice the default is remedied, the mortgagee may proceed to sell the land and exercise all or any of the other powers conferred by the mortgage and by the Property Law Act 1974. Dated this 1st day of March, [this year] To: Development Ltd, Level 2, 34 Gray Street, Southbank, QLD 4001 Signed: Jack Smith National Credit Manager, Giant Bank Ltd Advise Development Ltd. FEEDBACK Development Ltd has failed to make the payment