The Law Commission has published its report on the proposed Goods Mortgages Bill, together with a final version of the draft Bill. If enacted Goods Mortgages will replace Bills of Sale and will allow individuals to use goods as security for loans.
The use of Bills of Sale (including logbook loans on vehicles) has surged in recent years, yet they are currently governed by two Victorian statutes. Particular problems stem from lenders’ ability to seize the secured goods upon default without a court order, even if almost all of the loan has been repaid (in contrast to hire-purchase). There are also complex and costly documentation requirements for lenders, who must register Bills of Sale at the High Court.
The Law Commission’s Goods Mortgages Bill proposes the complete repeal of the current legislation. The Bill includes protections for borrowers (so goods are not seized too readily) and protection for innocent purchasers of vehicles subject to logbook loans. The creation of an electronic register of goods mortgages is proposed.