Substitution of lender or contributor under run-out mortgage
454 Substitution of lender or contributor under run-out mortgage
(1) Despite section 453, a legal practitioner may receive money from a client and do any work that is necessary solely for substituting a lender or contributor under a run-out mortgage.
(2) Section 444 does not apply in relation to anything done under subsection (1) and the legal practitioner is not required to obtain fidelity insurance for compensating the substitute lender or contributor for any pecuniary loss in relation to the substitution.
(3) If a client entrusts, or proposes to entrust, money to a legal practitioner for the purpose of substituting a lender or contributor under a run-out mortgage, the practitioner must give the client written notice:
of the effect of section 455; and
(b) that the practitioner is not required to have fidelity insurance in relation to the substitution under the run-out mortgage.
(4) The legal practitioner must not advance money received for subsection (1) to a borrower for a run-out mortgage unless the practitioner has given the client notice under subsection (3).
This Act’s bill:Explanatory statementSecond reading speech
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