| Focus: | Guide to key notifications by Receivers appointed for the purposes of asset realisation |
| Services: | Property & Projects |
| Industry Focus: | Property |
The appointment of Receivers to real property can be accompanied by a flurry of activity around gaining access and control of premises, making investigations (and surprising discoveries!) about the subject property and dealing with any businesses or tenants that are located on the property.
A significant amount of this work focuses on physical access and information gathering. However, Receivers also need to turn their minds to a series of notification procedures to deal with their appointment. These can often be fairly mechanical and tedious (compared to the potentially more eventful aspects of physically securing the property), though they are nevertheless essential steps in paving the way to an effective appointment and an efficient sale of the security.
Below is a guide to some of the key notifications that Receivers should be mindful of. We do point out, however, that for the purposes of this alert we have focused primarily on an appointment made by the appointor for the purposes of asset realisation.
1. Default notices
The right to appoint a Receiver is usually triggered by an event of default under the appointor's security documentation.
Although not the responsibility of the Receivers, whenever an appointment is made, the Receivers should seek confirmation from their appointee that the appropriate default notices have been served under the appointor's security and relevant legislation.
Whilst this may not be critical at the outset, it has the ability to place the Receiver in a precarious position where the notices have not been issued. Where the appointee has not served the notices it will not necessarily have the power to convey the property and, in turn, this will inhibit the Receivers ability to effect a sale.
New South Wales
Under section 57(2)(b) of the Real Property Act 1900 (NSW) for the power of sale to arise default notices need to be served on the mortgagor or chargor. Critical points to check are:
- Has the notice period of one month expired?
- Has a copy of the notice also been served on any mortgagee or chargee who holds a "lesser priority"?
- Has a copy of the notice been served on any caveator who claims an interest in the property by way of an unregistered mortgage or charge?
Queensland
Under section 84(1) of the Property Law Act 1974 (Qld), default notices need to be served on the mortgagor and, if the transaction is regulated by the National Consumer Credit Code, a copy of the notice must be given to any guarantor.
Unlike New South Wales, it is not a requirement (but may in certain circumstances be necessary) in Queensland for a mortgagee to give a copy of any notice served by it to any other mortgagee or chargee who holds a lesser priority nor to any caveator who claims an interest in the property.
ACT
Under section 93(2) of the Land Titles Act 1925 (ACT), default notices need to be served on the mortgagor and, if the transaction is regulated by the National Consumer Credit Code, a copy of the notice must be given to any guarantor.
As in Queensland, it is not a requirement in the ACT for a mortgagee to give a copy of any notice served by it to any other mortgagee or chargee who holds a lesser priority, nor to any caveator who claims an interest in the property.
2. Appointment deed
New South Wales
Although section 115A of the Conveyancing Act 1919 (NSW) suggests that the deed of appointment should be registered with Land & Property Information, the decision in Isherwood v Butler Pollnow (1986) 6 NSWLR 363 establishes that this is not specifically required. A deed of appointment can be registered in the general deeds index maintained by Land & Property Information, but generally it is simply annexed to the contract for sale or provided to purchasers if requested.
Queensland
There is no requirement for the deed of appointment to be registered with the Department of Natural Resources and Mines.
ACT
There is no requirement for the deed of appointment to be registered with the Office of Regulatory Services.
3. Notification to national regulators
| National Bodies | Is notification required? |
| ASIC | Yes – An ASIC Form 505 needs to be lodged with details of the appointment |
| ATO |
Yes – Within 14 days of taking possession of a company's assets for the company's debenture holders, the receiver must give written notice to the Commissioner of that fact. Additional correspondence or enquiries with the ATO may also be necessary. For example, if GST is potentially relevant to a sale, then the ATO may need to provide confirmation that the mortgagor is registered for GST (or, where the mortgagor has failed to register, the Receivers may need to go through this process) |
4. Notification to state entities
| State Entities | Is notification required? | |||
| NSW | QLD | ACT | Comments | |
| Local Council | No | No | No | Although (unlike a mortgagee in possession) notice is not required, it is always advisable for Receivers to notify the Local Council of their appointment. This gives the Council the opportunity to advise the Receivers of the current status of any arrears of rates or outstanding notices which are applicable to the property. |
| Office of State Revenue | No | No | No | It is advisable to notify the relevant Office of State Revenue where there is a potential for an outstanding land tax liability. As land tax is a statutory charge on the land, any settlement of a sale cannot proceed unless the land tax charge is cleared. Recent experience suggests that Office of State Revenue requires clearance of the entire land tax liability for the mortgagor rather than just the charge for a specific property. |
| Utilities providers | No | No | No | Enquiries should be made as to any transfer of accounts or outstanding liabilities. |
| Strata body | No (Owners Corporation / Strata Manager |
Yes (Body Corporate) |
No | In Queensland, a Receiver is required to complete and provide to the Secretary of the Body Corporate a BCCM Form 8 Notice (a copy of the appointment will be required to be annexed to the form). |
| Strata body | No (Owners Corporation / Strata Manager |
Yes (Body Corporate) |
No | In Queensland, a Receiver is required to complete and provide to the Secretary of the Body Corporate a BCCM Form 8 Notice (a copy of the appointment will be required to be annexed to the form). |
| Rural property regulators | No | No | No | Receivers should seek confirmation from their appointor that the appropriate default notices have also been served under any relevant rural legislation (specifically section 71X of the Water Management Act 2000 (NSW) or section 140(4) of the Water Act 2000 (Qld). |
| Licensed Premises Regulators | Yes | Yes | Yes |
The Receivers should be quick to take steps to make the necessary enquiries and applications to protect any liquor licence. Notifications will be required where:
|
| Environmental supervisory bodies | Potentially | Potentially | Potentially | Only where the Environmental Protection Agency or some other government department has a specific requirement (either due to ongoing investigations or licensing requirements) does a notification need to take place. Receivers should take care to make the necessary enquiries regarding any potentially hazardous site or any site which includes the operation of a potentially hazardous business. There may be specific appointment notifications required in certain circumstances. |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
