New South Wales Consolidated Regulations

LEGAL PROFESSION REGULATION 2005 - REG 149

149 Authority to secure by regulated mortgage

(1) The mortgagee solicitor must provide each lender or contributor lending, or proposing to lend, money secured by a regulated mortgage with a disclosure notice and a lending authority, each in a form approved by the Law Society Council.

(2) The mortgagee solicitor must not, whether alone or by an associate or otherwise, cause or permit the application to a loan secured by a regulated mortgage of:

(a) any trust money, or

(b) any money that is advanced, or to be advanced, where the borrower is introduced to the lender or contributor:

(i) by the solicitor or an associate of the solicitor, or

(ii) by an agent of the solicitor, or

(iii) by a person engaged by the solicitor for the purpose of introducing the borrower to the lender or contributors,

unless the solicitor has previously obtained a lending authority in respect of that money, in a form approved by the Law Society Council, from the lender or contributor for whom or on whose behalf the money is to be applied.

(3) Subclause (2) does not apply if:

(a) the money is applied pursuant to the written instructions of a lender or contributor who has nominated the borrower and specified the security, its priority and the terms of the loan independently of any advice given by the solicitor to the lender, and

(b) the lender or contributor has not been introduced to the borrower:

(i) by the mortgagee solicitor or an associate of the mortgagee solicitor, or

(ii) by an agent of the mortgagee solicitor, or

(iii) by a person engaged by the mortgagee solicitor for the purpose of introducing the borrower to the lender or contributors.

(4) A mortgagee solicitor who is the attorney under power of a lender or contributor must not:

(a) apply the funds of the lender or contributor to a loan not authorised in accordance with subclause (2), or

(b) execute, on the mortgagee or contributor’s behalf, an authority referred to in subclause (2) unless subclause (5) is complied with.

(5) This subclause is complied with only if:

(a) the instrument granting the power was executed before 1 January 1987, or

(b) the instrument granting the power contains a specific power enabling the mortgagee solicitor to make the loan to which the authority relates, or

(c) at the time the instrument granting the power is executed:

(i) the signature of the donor is witnessed by a solicitor instructed independently of the donee, and

(ii) the solicitor certifies in writing on the instrument that he or she has explained to the donor the donee’s power of investment and that the donee has had a discretion to choose the security and the terms for any investment.

(6) A mortgagee solicitor who obtains the execution, by or on behalf of a lender or contributor, of a lending authority:

(a) must not delete any of the contents of the form in which it is given (except if an alternative is provided in the form), and

(b) must ensure that any clauses in the form are not varied or contravened, whether directly or indirectly, by the mortgage documents or any associated documents.

(7) A lending authority that complies with this clause is taken to be an authority for the purposes of section 484 (2) (b) of the Act.