Variations of mortgage and mortgagee consent under the Land Transfer Act 1952

This article considers whether a prior mortgagee must consent to the variation of a later registered mortgage under s 102(4) Land Transfer Act 1952. The 1952 Act was repealed and replaced with the Land Transfer Act 2017 on 12 November 2018.

Section 102 of the Land Transfer Act 1952 deals with the variation of mortgages.  Subsection (4) of that section reads:

“(4) If the land is subject to another mortgage, the consent of the mortgagee under that mortgage must be obtained.”

On a literal interpretation, that provision does not make a distinction between another mortgage registered before or subsequent to the mortgage being varied.

The current subsection (4) was inserted in 2002.  Prior to that amendment, section 102(4) was worded differently, and more clearly required only the consent of a mortgagee whose mortgage was subsequent to the mortgage being varied.

It is clear that the 2002 change to the subsection, which ostensibly extended the consent requirement to all mortgagees, was not intended to catch prior mortgages. The Law Commission has also noted this anomaly and recommended that it be rectified in its report entitled A New Land Transfer Act.

Consequently, the Registrar will not be asking for the consent of mortgagees whose mortgages have priority over the mortgage being varied, and it will only be necessary to obtain the consent of mortgagees of mortgages that are subsequent to the mortgage being varied.  

However it should be noted that the situation is quite different in respect of leases and easements. The relevant provisions that deal with variations to leases and easements require the consent of the mortgagees of both prior and subsequent mortgages. See sections 116(7) and 90E(3) Land Transfer Act 1952.

Last Updated: 12 November 2018