Chapter 10 - Property law: mortgages, leases and licences. At the end of this chapter you should understand: the definition of the term ‘mortgage’ and the distinction between old title mortgages and Torrens system mortgages, the remedies available to a mortgagee if a mortgagor defaults, the definition of a personal property security,...
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Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Copyright © 2000 McGraw-Hill Australia Property law: mortgages, leases and licences Chapter 10 Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Definitions • Ownership: Person has legal rights over the property • Possession: Person has physical control over the property Copyright 10-3 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Property Real property - Land - Items attached to land - Leases Personal property - Chattels that can be possessed (tangible objects) - Chattels that cannot be possessed (intangible objects) (not real property) interest in partnership » copyright » shares » trademarks » Copyright 10-4 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Real property - attachments Test Fixtures Fittings (part of real property for sale purposes) Manner of attachment Purpose of attachment (intention) Permanent Can be easily removed For enjoyment of the item Damage Major damage Minor damage resulting to remove Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e 10-5 by Barron & Fletcher Slides© prepared by Kay Fanning Copyright 2000 McGraw-Hill Australia Interests in land • Doctrine of Tenure: Absolute ownership not possible as all land owned by Crown Copyright 10-6 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Freehold Estates in land Interest in land of uncertain duration • Fee simple: Interest continues, provided owner dies leaving an heir • Life estates: Created for life of a particular person Leasehold Contract in the form of a lease for a fixed period between two parties: - lessor (landowner) - lessee (tenant) Native title to land Title enjoyed by descendants of the original inhabitants Copyright 10-7 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Estate in land – freehold Reversion Remainder A (Fee simple of land) A (Fee simple of land) on B’s death B (Life estate of land) B (Life estate of land) on B’s death C Copyright 10-8 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Definitions • Lease: An interest in land given by a landlord to a tenant, for a fixed period of time, granting exclusive possession eg lease of shop, house • Licence: A contractual right (unable to be revoked) to something on land that would otherwise be illegal e.g sell alcohol manufacture a product under patent Copyright 10-9 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Comparison of lease and licence LEASE Can be registered on title For a set period LICENCE Cannot be registered on title Can be revoked at any time Right to sublet, assign or sell unexpired portion Right to exclusive possession Right to sue in trespass Copyright 10-10 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Securities for loans • A mortgage is a contract in which a borrower (the mortgagor) gives the lender (the mortgagee) his/her real property as security for a loan Copyright 10-22 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Mortgages over real property OLD SYSTEM Mortgagor transfers title to mortgagee TORRENS SYSTEM Mortgagee registers on title (Can be more than one) Mortgagor redeems land on payment of all mortgage moneys (Equity of redemption) Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e 10-23 Copyright © 2000 McGraw-Hill Australia by Barron & Fletcher Slides prepared by Kay Fanning Remedies in the event of default • • • • Sue for breach of contract Appoint a receiver Power of sale Obtain a foreclosure order Copyright 10-24 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Power of foreclosure Mortgagee can take over the property if mortgagor defaults Major requirements: • Default of at least six months • Failure to achieve mortgagor’s debt at public auction • Shortfall is not recoverable from mortgagor Copyright 10-25 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Common law duties Common law duties of a mortgagee who sells up a property: • Must give one month’s notice of intention to sell • Must obtain best possible price for property sale Copyright 10-26 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Bill of sale • A contract allowing personal property to be used by the grantee (borrower) as security for a loan from the grantor (of the bill of sale) Copyright 10-27 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Security interests • A pledge is a transfer of possession (not ownership) of a chattel, giving the lender (pledgee) the right to sell the pledged goods if the borrower (pledgor) defaults by the stipulated date, or within a reasonable time (if no date stipulated) Copyright 10-28 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Security interests • • • • • • A lien gives a creditor a right to possess the debtor’s property until the debt is paid A particular possessory lien is the right of one person to retain possession of goods of another until the debt associated with those goods is paid A general possessory lien is the right of one person to retain possession of goods (lawfully obtained) of another until the debt owing is paid An equitable lien is the right to have the property of another utilised to ensure payment of a debt, without possession of the property Maritime liens are specifically binding on a ship and its cargo and freight Statutory liens are created by an Act of Parliament Copyright 10-29 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Guarantee • A contract where one party (the guarantor) promises another party (the creditor) to carry out the obligations to another (the debtor), should the debtor default on their obligations Copyright 10-30 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Indemnity • A contract where one party (the indemnifier) undertakes to become liable to another against any loss arising out of a transaction with a third party Copyright 10-31 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Bailment • Occurs when possession (not ownership) of goods is transferred from one person (bailor) to another (bailee), e.g pledge Copyright 10-32 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Duties and liabilities of a bailee Duties of a bailee • To return the goods to the bailor at the expiry of the bailment • Not to misuse the goods • To retain possession of the goods • To take (reasonable) care of the goods Liability of a bailee • Breach of contract • Tort of - Negligence - Conversion - Detinue • Vicarious liability Copyright 10-33 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Duties of a bailor • Not to interfere with possession of goods that the bailee has, for the duration of the bailment • To ensure quality and fitness of goods for a particular purpose Copyright 10-34 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Innkeepers Persons who hold themselves out as providing accommodation for travellers: • Hotel keeper • Motel keeper • Liability: For loss or damage of guests’ property, taken into their possession for safekeeping Copyright 10-35 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Common carrier A carrier whose business is to carry goods for any customer requesting this service: • Airlines • Shipping operators • Railways • Liability: For any loss or damage to goods in its possession Copyright 10-36 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning ... of land) B (Life estate of land) on B’s death C Copyright 1 0- 8 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. .. Copyright 1 0- 10 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Types of lease... payment of all mortgage moneys (Equity of redemption) Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e 1 0- 23 Copyright © 2000 McGraw-Hill Australia by Barron & Fletcher