Interest being mortgaged on a mortgage document the bank files with the Land Registry Office in Queensland raises some questions. We’re not lawyers, and none of this is legal advice. Do your own research…

Firstly, there’s no “street address”, only a Lot number…

A street address is typically used for practical purposes (such as mail delivery or navigation), but it may not be legally sufficient for property ownership or legal descriptions. The lot number, often found in property deeds or official records, refers to the specific parcel of land as designated in land surveys, subdivision plans, or title documents.

In legal terms, properties are often identified by a combination of the lot number, block number, and parcel number (in some jurisdictions), rather than just the street address.

What Does the Mortgage Document Mean?

On a mortgage document, in legal terms, “interest” typically refers to the lender’s legal claim or right over the property, not the property itself. When a property is mortgaged, the borrower still retains ownership of the property, but the lender has a security interest in it.

The “interest being mortgaged” is the lender’s legal right to the property if the borrower defaults on the loan and foreclosure takes place. In other words, the security “interest” the lender holds in the property as collateral for the loan… If the borrower defaults, the lender may have the right to seize or sell the property to recover the debt.

So the title to the property usually remains with the borrower unless the lender takes action to foreclose due to non-payment. The lender only has a legal right to the property until the debt is repaid, through its interest, not full ownership.

Clarifying “Interest” in a Mortgage Context

The phrase “interest being mortgaged” on the mortgage document the Bank files with the Land Registry may cause confusion, but it’s standard legal language.

In a financial context, the correct term would generally be “property”, rather than “interest being mortgaged.” Here’s why:

“Property” refers to the actual asset (e.g., real estate, land, or a building) as collateral for a loan or mortgage. When a mortgage is taken out, the property itself is typically the subject of the loan, and the lender may have a claim to that property in the event of default.

“Interest” refers to the lender’s legal claim or interest in the property. It’s not the most precise way to describe the asset itself. The term “interest” could refer to the lender’s rights or ownership share (e.g., a security interest or lien), but not the property being pledged.

If you’re referring to the asset that is being mortgaged (i.e., the real property), you’d say “property” or “the property being mortgaged.”

Example: “The property located at [address] is being mortgaged as collateral for the loan.”

Alternatively, if you’re referring to the rights or claim the lender holds over the property, you might say “mortgage interest” or “lender’s interest.” But this would typically not refer to the property itself.

Example: “The lender holds a mortgage interest in the property.”

So, to summarize:

“Property” is the correct term if you’re talking about the real estate being used as collateral.
“Interest” refers more to the rights or claims on that property, not the property itself.

Interest Being Mortgaged

If there’s any confusion about the phrasing or if you believe there may be an issue with how the lender has documented their claim, review the entire mortgage document. Read the whole thing including any terms, conditions, and definitions. This should clarify the exact nature of the lender’s rights over the property.

Consult a Lawyer or Conveyancer:

If there’s still doubt about the specific language in the mortgage document or if you suspect that the document was improperly drafted or filed, it’s best to consult a property lawyer or a conveyancer. They can help you understand whether the language is standard or if there is a legitimate issue with the registration of the mortgage.

Remove Interest being Mortgaged

Should you ask for the bank’s “interest being mortgaged” to be removed by the bank? Rather than asking to fully discharge any liens, claims, or securities over the property?

If you’re specifically addressing the lender’s security interest (which is typically what is being “mortgaged”), the phrase “interest being mortgaged” is indeed more appropriate, because it refers to the lender’s claim on the property as collateral for the loan.

Make sure the terminology aligns with what you’re asking for in terms of removing the lender’s rights over the property. Perhaps focus on discharging the “mortgage interest” or “security interest”, which is what the bank holds in the property.

The phrase “fully discharge any liens, claims, or securities” is also accurate, but “interest” would more precisely refer to the legal claim the bank has over the property, until the debt’s fully repaid.

This makes it clear you’re asking for the removal or discharge of the lender’s mortgage interest or security interest on the property… Which is the right the bank holds in the property as collateral for the loan.

Key Points:

  • “Mortgage interest” or “security interest” refers to the bank’s claim over the property.
  • “Liens” and “claims” are more general terms that can encompass a variety of legal rights the bank may have, including the mortgage interest.
  • Using “mortgage interest” or “security interest” provides more clarity and precision, particularly if you’re aiming to remove the bank’s claim on the property.

If you specifically want to ensure that the lender’s claim is removed from the title, it’s also important to ask for written confirmation that the Bank takes all necessary actions to discharge the mortgage, and notify the Land Titles Office.

Liabilities and debts

Debts:
Debts specifically refer to money owed by one party (the debtor) to another party (the creditor)… Particularly the principal and possibly interest on the loan. It’s a narrower term referring to an obligation to pay money, often as a result of borrowing or a contractual agreement.

A debt on a loan can include legal fees, depending on the terms of the loan agreement and the circumstances. Legal fees can be part of the total amount owed under a loan if the loan agreement specifically provides for such costs… Or if they arise as a result of enforcing the loan agreement or collection of the debt.

Liabilities:
“Liabilities” encompasses not only debts but also other financial obligations or responsibilities… (Which may or may not involve money owed).

Liabilities may include debts, legal obligations, contingent liabilities (potential obligations that may arise depending on certain events), and other expenses. There may be associated costs such as legal fees, interest, or penalties incurred due to the loan’s non-payment or default.

Example: A company’s balance sheet lists not only debts (like loans) but also other liabilities, eg taxes owed.

Debts is a more precise term for money owed or an obligation to repay a sum of money.

Liabilities is applicable to a broader set of financial obligations (including debts and other types of obligations).

For example, in a legal letter, if you’re addressing money owed (e.g., loan balances), “debts” would likely be more accurate. If you’re referring to broader financial obligations, including potential or contingent liabilities, “liabilities” would be the correct term.

Loan Agreement Debt Recovery

Many loan agreements include provisions allowing the lender to recover legal fees and other costs incurred in enforcing the loan. These provisions are often referred to as “legal fees clauses” or “costs of collection” clauses.

Example: If the borrower defaults on the loan… Some agreements specify the borrower’s responsible for paying principal and interest, plus collection/legal fees.

Default and Enforcement:
When the borrower defaults, and the lender takes legal action (e.g., suing the borrower, seeking judgment, or foreclosing on collateral). These costs  may be added to the outstanding balance of the debt. In such cases, legal fees could become part of the debt.

Example: A court may award the lender legal fees as part of the judgment. Or the borrower might be required to pay the lender’s legal fees if stipulated in the loan agreement.

Other Costs:
There’s other costs associated with loan recovery such as collection agency fees, and administrative fees. These can also sometimes be included as part of the debt, depending on the loan agreement and applicable laws.

This isn’t legal/financial advice. Do you own research.

Remember this:

Banks make mistakes. Notice how lawyers and senior executives deflect questions, remember nothing, and admit nothing.

Do as they do. Admit nothing. Deny Everything. Ask for proof. If you want some tips, watch Bates v Post Office Ltd., and the Horizon enquiry. Substitute “Post Office” for [your] “bank”.