NCA Q's and A's: Mortgagor-conveyancer relationship

7 May 2007

Q. Can the pre-agreement be sent electronically? - 17 May

A. Yes. S92(6) of the NCA indicates that a statement sent by this section must either be in paper form or in "printable electronic form".

Q. What happens if a client is retrenched soon after having been assessed favourably and the loan granted? - 17 May

A. This will obviously affect the ability of the mortgagor/client to afford the loan, and so is pertinent information that you as the bank's representative will need to share with the bank. The bank in turn is likely to resile from the loan agreement (before the bond is registered) due to the fact that the mortgagor can no longer afford the loan or else face the possibility that the loan could be declared reckless by a court.

Q. To what extent should the fine intricacies of the documents be explained to the client? - 17 May

A. S81(2) indicates that a Credit Provider (and by inference the attorney representing the bank) must take "reasonable" steps to assess the consumer's "general" understanding and appreciation of the risks and costs of the proposed credit and the rights and obligations of the consumer under the credit agreement. The use of the words "reasonable" and "general" in this context seems to indicate that the legislation is not completely unsympathetic to conveyancers who don't explain the exact and fine intricacies of each agreement. As can be seen each case would be unique and would need to be assessed in the context of its own circumstances so it is difficult to create a rule of thumb to apply to the explanation that needs to be provided by the conveyancer.

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