Posted: January 19th, 2023

Kate and Hugh are siblings

Assignment Task

Question:

Kate and Hugh are siblings who own equal shares in a Torrens Title property. To purchase the property, they borrowed $800,000 from Augustine Bank.

When the value of the property went up, Hugh decided that he would like to start up an investment portfolio. He had read stories that he could make good money from Bitcoin. Hugh and Kate approached Augustine Bank to borrow another $200,000. After performing the requisite assessments, Augustine Bank advanced the $200,000.

Hugh used this money to purchase Bitcoins and was excited to see that the value of the Bitcoins went up almost immediately. He started using his savings and wages to purchase more. When the value of the Bitcoins was worth double what he had put in, Hugh decided it was a good time to sell. But when he sold the Bitcoins, he never received any cash. After investigation it turned out that the company selling the Bitcoins was fraudulent. Hugh is suing the fraudulent company to recover his losses.

Unfortunately, at the same time Kate was made redundant at her work place. Due to these events, Kate and Hugh were unable to make their mortgage repayments for two months. Augustine Bank seeks to exercise their power of sale.

List the information Augustine Bank must include to provide adequate notice to exercise the power of sale validly. Refer to relevant statute and case law in your response.

Assume that Augustine Bank provided valid notice. Augustine Bank obtained an independent valuation that Kate and Hugh’s property is currently worth $1,000,000. Augustine Bank advertised the sale of the property over the Internet and in the local newspaper for eight weeks before going to Auction. At Auction the highest offer was $850,000, so the sale was passed in.

Roland is a manager of Augustine Bank. Part of his job responsibilities are to keep track of properties being sold under power of sale by Augustine Bank. He liked Hugh and Kate’s property and so he made an offer to the real estate agent of $1,000,000. The Contract of Sale has been exchanged.

Meanwhile, Hugh manages to obtain an out of court settlement with the fraudulent Bitcoin company. He receives a payout of $700,000. Hugh and Kate’s parents are also willing to gift them $300,000 if it will mean their children can keep the property.

Advise Kate and Hugh on whether they can prevent their property from being sold. Refer to relevant statute and case law in your response.
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In order to provide adequate notice to exercise the power of sale validly, Augustine Bank must comply with the relevant state legislation. This typically includes providing written notice to the borrower of the default, the amount owing, and the intention to sell the property. The notice must also specify a date and time for the sale, and the borrower must be given a reasonable opportunity to cure the default prior to the sale.
In this case, it appears that Augustine Bank has provided valid notice and has followed the required procedures, including obtaining an independent valuation and advertising the sale of the property.
However, Kate and Hugh may be able to prevent the sale of the property with the money they received from the payout and gift from their parents. They can use this money to pay off the outstanding mortgage, and Augustine Bank will not be able to exercise their power of sale. They should also check if there are any legal actions that can be taken against the fraudulent Bitcoin company.
However, since the property is under contract, it depends on the terms of the Contract of Sale, if Augustine Bank has rights to sell the property to another party, Kate and Hugh should check the details of their contract and seek legal advice to know their rights.