Law changes allowing a mortgagee selling up on default to buy the secured property without first going to auction are in operation, potentially assisting resolution of intra-family debt defaults. Direct purchases require prior court approval, supported by evidence of current market value.
The High Court was asked to approve a mortgagee’s purchase of a property at Oruawharo, on the Kaipara Harbour in Northland. In April 2108, Shuqing Wang borrowed $150,000, this loan secured over the property. Twelve months later, the secured creditor sold her interest in the mortgage to a Mr Hall.
No interest payments were ever made. Mr Hall held off any enforcement during the covid-19 pandemic.
In June 2023, he set in train procedures for a mortgagee sale. By now, Ms Wang was living in China.
Evidence was given that the property was passed in at auction in August 2023, after a six week marketing campaign. There was one bid at $150,000. A registered valuation obtained one month later appraised the market value at $450,000, but discounted the value to between $292,500 and $337,500 given that it was a forced sale and that the market had weakened during the previous year.
To avoid the need for a second auction, Mr Hall sought High Court approval under the Property Law Act to buy at $350,000; the unpaid loan plus accrued interest.
Giving approval, Justice La Hood said the price offered by Mr Hall was reasonable.
re Hall – High Court (7.12.23)
24.026