Non-bank lenders sometimes secure their loans via an
unregistered second mortgage over real property, supported by
caveat. In the event of a default, these mortgages are more
difficult to enforce via a court action, as compared to a
registered mortgage. Our view is that an unregistered mortgage
should rarely be accepted by a lender as principal form of
security.
The problem of prior registered mortgages
Incoming second mortgagees seeking registration of a mortgage
must deal with any prior registered mortgagee. This is because the
prior mortgage almost always has a condition requiring the first
mortgagee's consent to latter mortgages. Also, the security
property's certificate of title needs to be produced for
registration. An existing first mortgagee would therefore ideally
be approached by a proposed second mortgagee to seek that first
mortgagee's consent. A condition of that consent will normally
include a requirement for a Deed of Priority to be entered
