Join me as I discuss current issues and innovations relating to finance and property and how these may affect you, the property investor and developer.
Each episode features a special guest, we have a casual discussion in my guest’s field of expertise while enjoying one of my favourite pastimes, which is Gourmet French cooking at home in my kitchen.
Episode 4 - October 2021
Special Guest Matthew Bransgrove, Managing Partner at Bransgrove’s Lawyers
Topic of Interest The Real Property Amendment (Certificates of Title) Act of 2021, 2nd Mortgagees and Mezzanine Lending
Who it may affect Property Developers, 2nd mortgagees, and Mezzanine Financiers
This episode’s dish Nordic Salmon, Beurre Rouge sauce
topic overview
The Real Property Amendment (Certificates of Title Act) 2021 came into effect this week, on 11 October 2021, and has the effect of making obsolete paper certificates of title and the Control of the Right to Deal (CoRD).
Under this amendment to the Act, an intending second mortgagee (including mezzanine financier) is no longer required to seek the consent of a first ranking mortgagee.
The immediate effect of this is the ease and speed at which 2nd mortgage, and mezzanine finance can be raised and released to the borrower.
Right at this particular time, LINK Commercial Mortgages is experiencing a heighted level of enquiry for urgently required funds from developers of Class-2 buildings (medium-high density residential developments of 4-storeys and above) which fall under the new SBBIS (see episode 1 of In JP’s Kitchen) – the funds being required to pay the 2% Building Defects Bond in order to qualify for Occupation Certificate (and to avoid harsh penalties).
While there may be several avenues to provide for the satisfaction of this requirement, a short-medium term mezzanine facility may be a feasible option.
While this amendment to the Act may open the flood gates for 2nd mortgage and mezzanine lenders, there are several fundamental factors that must be considered and adhered to in order to protect the subordinated lender’s capital…the common law rules of Tacking immediately come to mind.
In this episode of In JP’s Kitchen, the operations of the newly amended act, with regard to 2nd mortgage (including mezzanine) lending are discussed together with the usefulness of the recent amendment as well as the potential dangers. Join us to find out what this means for property developers, senior debt providers, and subordinated creditors and how it may affect you.