- DEBT SECURITY ENFORCEMENTS -

Debts are secured in one of two ways. They are secured either by land or by goods.

If secured by land, the security takes the form of a mortgage that is registered against title to the property. If secured by goods, the security takes the form of a Notice of Security Interest that is registered with a Notice of Security Interest under the Personal Property Security Act (the “PPSA”), usually identifying the specific goods pledged as collateral.

If the debt secured by land goes into default, the mortgagee can bring an action for power of sale against the mortgagor under the Mortgages Act and eventually sell the property to cover the debt. However, this can be a long and costly court procedure. This is why it is usually beneficial to also secure the debt against goods, as well as the land, because collection against goods is faster and more cost efficient.

If the debt secured by goods goes into default, the lender can immediately retain a bailiff to go in and seize the goods that were pledged as collateral to the loan. The security must be registered under the PPSA, but after only 15 days notice, the bailiff is able to sell the goods in satisfaction of the debt. It is a fast and efficient remedy, and allows the debt to be dealt with before the arrears get too high.

The PPSA allows debts to be secured against both land and goods, giving the lender the option to proceed against one or the other, or both. The provisions of the Mortgages Act allow the debtor so many delays and options to prolong the process, it is good practice to include a security in goods, in addition to the mortgage, just to ensure that effective steps can be taken to get payment on the debt before the arrears get out of control.

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