Step 8 – Obtain judgment

Default judgment

At the conclusion of 30 days we will file for a default judgment. This means we seek judgment for possession on the basis that the security owner has not filed a defence. This is a paper driven process involving filing documents with the court through its online portal.

The court usually turns such applications around within a few days to a week. The document that comes back is a judgment for possession and an order to the sheriff, known as a writ, to evict and turn over possession to the lender’s locksmith and real estate agent (who take possession on your behalf).

Summary judgment

Sometimes the borrower will file a defence which on its face is no defence at all. For example they might say that their business has suffered reverse due to a major customer going into liquidation and they just need six months to turn things around and rectify the debt. Such defences are not filed by lawyers (who know better) but rather are typically filed by the borrower themselves.

If such a defence is filed there is no need to have a trial. Instead we will file a motion seeking to strike out the defence and for an award of summary judgment.

Adjudicated judgment

An adjudicated judgment is needed where the security property owner files a defence which is arguable. An example of an arguable defence is one which could, if true, result in some modification of the lender’s demands.

The main defences that tend to be raised are:

1. The lender made me an oral promise not to enforce the mortgage while I sought to sell the property on my own

This is why it is unwise to communicate with the borrower except in writing through your lawyers. In any event even if you did communicate with the borrower it never succeeds because it is not believable, or is open ended or the borrower did nothing to earn such a promise (even if it was made).

2. The mortgage terms are unconscionable or unjust

This defence never succeeds unless the lender is an unconscionable loan shark charging usurious rates of interest. We do not act for predatory lenders.

3. The entering into of the mortgage in the circumstances is unconscionable

If the lender makes no enquiries into the purpose the funds are being used for, and/or if the purpose is delusional, for example the borrower is on a pension and using the money to buy an additional property, then the lender can be found to have acted unconscionably because they took on a loan they knew or suspected (or would have known or suspected if they made reasonable enquiries) would go into default. The money still has to be paid back (and the court will order the property sold to achieve it) however the interest and fees charged by the lender may be forfeited. We will not allow you to enter such a mortgage.

4. The entering into of the mortgage in the circumstances is unjust

If the borrower does not get the benefit of the money (it is siphoned off by a third party) and the borrower is a vulnerable person, and the lender, by turning a blind eye or failing to make reasonable enquiries to what was going on enabled the vulnerable borrower to be stripped of their equity, then the loan might be partly, or wholly, set aside. We will not allow you to enter such a mortgage.

5. The mortgage is a forgery

If your lawyer takes reasonable steps to identify the borrower and or complies with the safe harbour VOI provisions and the mortgage is nevertheles a forgery then the mortgage acquires indefeasibility. This means you can sell the property and recover your money even though the mortgage is a forgery. The owner of the property is entitled to compensation from the Torrens Assurance Fund and that money is usually used to pay out the mortgage. We will not allow you to enter such a mortgage.