Penalty Clauses In Broker And Management Agreements

The November 2008 judgement of the New South Wales Court of Appeal in the Integral Home Loans case provides further guidance for the mortgage industry in negotiating broker and management agreements.

As is usual in slower economic times, agreements prepared and signed in haste are being examined in greater detail to determine the respective rights of funders, brokers, and managers. The Integral decision will help that examination.

Origination and management agreements are vital contracts which often have a long life (the trail can last as long as the term of the mortgage). The amounts payable under these agreements can be significant and the risk of dispute is high.

These agreements should not be "set and forget". They need to be regularly reviewed to ensure they are up to date.