Finance & mortgages
A mortgage or loan maybe entered into by:
- the sole owner of a Māori land block
- all the owners of a Māori land block acting together
- the trustees of a Māori land block who are empowered to raise finance against the block
- a Māori Incorporation which holds Māori land.
If you are considering a finance or mortgage arrangement you will need to consider:
- the value of the land – how much is the land worth on the open market
- your ability to service a loan – can you afford the repayments (including any interest).
Making a decision to provide finance
We do not have a role to play when it comes to a bank or lending institution making a decision about whether or not to grant you a mortgage or loan.
Banks and lending institutions will normally assess your ability to service any loan using their own criteria and they will ask you to provide them with information about your finances and income to inform that decision.
In making a decision they may also ask you about any assets you may have that you could use as collateral (something they could sell if you fail to make adequate payment of your debt) – this includes your Māori land.
Our Act does not prevent you from offering your Māori land as collateral against a loan or mortgage. However, a bank or lending institute will assess whether or not they would be able to sell any assets should the need arise, and, depending on your ownership type, this could be difficult in the case of Māori land.
Under any loan or mortgage agreement you have certain obligations, in particular, to make regular payments to pay off your debt.
Once you make full and final payment of the loan amount and any interest, your bank or lending institution will discharge the loan or mortgage.
Any mortgage, including the transfer, variation, discharge or surrender of that mortgage, must also be forwarded to us so we can update our records. We will ask you:
- to send a two copies of the mortgage or the transfer, variation, discharge or surrender of that mortgage
- to file your documents with the court and pay the filing fee of $20
In many cases a mortgage is created through an Authority and Instruction to Act (A&I) form by your bank or lending institution.
Copies of the completed A&I form can be supplied in the place of an actual mortgage agreement.
A registrar will update our records and return one copy of the mortgage or the transfer, variation, discharge or surrender to you with our endorsement. No hearing is required.
If you default on your loan or mortgage (fail to make full payment), and the bank or lending institution decides to call in your debt, any asset you have used as collateral, including any Māori land, can be transferred to the bank or lending institution who may then sell that asset at market rates to pay any of your outstanding debt.
This is part of the risk that you take when using Māori land as collateral.
We are unable to stop any transfer or sale of land when a bank or financial institution exercises their right to do so under a power granted them in a mortgage or loan agreement.
Whilst the land must be sold as Māori land (it does not automatically become general land) a mortgagee sale is not subject to the requirement to offer the land to the preferred class of alienee under our Act, and it may be sold to anyone at any price.
Once sold and transferred to the new owners all future transfers or sales then become subject to the preferred class of alienee provisions of our Act.
If you are considering your options as to finance, you should get:
- independent advice from your local Community Law Centre (external link)
- budgeting advice from your local Citizen's Advice Bureau (external link)
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