A great deal of news and media attention has been paid to what many consider to be an Australian property bubble. No doubt some will agree whilst others will say there is no property bubble and prices will do no more than plateau for a period. Whichever view you subscribe to there is an increased risk of many households having to deal with the prospect of mortgage stress and the possibility that banks and other lenders may move to exercise a power of sale if there has been a default under the mortgage. One of the questions that arise is whether a mortgagor can seek damages for a sale at an undervalue or alternatively whether a lender can oppose a demand for compensation.
Historically, the position wasn't as simple as one might have hoped for. In some cases, where a party asserted a breach in the power of sale, reliance needed to be placed on either a judicial standard of care or perhaps where a corporate mortgagee was involved on s 420A of the Corporations Legislation. In about 2011 s 111A of the Conveyancing Act 1919 (NSW) came into operation and it imposed a statutory duty on a mortgagee to take reasonable care to ensure that land is not sold for less than market value (or the best price where no market value).
Arguably, s 111A also imposes the duty on the relevant agent and where there is a failure to comply the mortgagor may be able to seek damages.
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