Key points

• Attempting to register a mortgage common provisions (MCP) in Victoria is often viewed as a challenge due to the Registrar’s strict registration requirements.
• Land Use Victoria (LUV) have now proposed several changes to the Registrar’s Requirements for Paper Conveyancing Transactions, which may further complicate the process of registering MCPs in Victoria.
• LUV are now seeking feedback on the proposed changes with submissions due by 26 September 2023.

Background

Registering a new MCP in Victoria often comes with difficulties due to the Registrar’s strict registration requirements. This is particularly problematic given the upcoming changes to the unfair contract terms legislation, with many lenders seeking to have new UCT-compliant MCPs registered in all jurisdictions ahead of 9 November, when new penalties apply for having unfair contract terms in standard form contracts.

The impact: what you need to know

LUV are now proposing several changes to the Registrar’s Requirements for Paper Conveyancing Transactions and are seeking feedback on the proposed changes.

One of the proposed changes is that, from 1 February 2024, a mortgage lodged for registration in Victoria must not include provisions that relate to other documents such as loan agreements and guarantees.

In practice, an MCP will almost always be used in connection with a loan, and so the MCP is ultimately a customer-facing document that is provided to mortgagors along with other documents relating to their loan. Accordingly, it is important that some key terms of the loan are included or repeated in the MCP. This is particularly important from an enforcement perspective as the mortgage and loan contract are distinct and separate contracts, and lenders may choose to enforce under one but not the other.

The effect of the proposed changes to the Registrar’s Requirements is that from 1 February 2024:

1. a new MCP lodged for registration must not contain certain terms relating to loan agreements and guarantees; and
2. new mortgages lodged for registration cannot incorporate existing registered MCPs that contain such terms.

It seems that LUV are effectively phasing out the use of ‘old’ MCPs that have been in use by mortgagees for many years if those MCPs contain terms that the Registrar considers inappropriate, which may mean that lenders will be obliged to register new MCPs that comply with the Registrar’s requirements.

If the proposal proceeds, one outcome may be that a separate MCP may be required for Victoria instead of having one MCP that is used nationally. This would increase the risk of error and complicate systems.

Next steps

The changes proposed by LUV are deeply concerning. Dentons strongly encourages all financial institutions to oppose to this proposal by emailing luv.consultation@delwp.vic.gov.au.

Submissions are due by 26 September 2023. Please let us know if Dentons can assist in preparing a submission to the proposed changes on your behalf.