Article 2.2.6 Mortgages and Security Interests

(a) Nature and Legal Effect:

(i) A mortgage shall be treated solely as a security interest over real property or a registrable estate and shall not operate as a transfer of legal title.

(ii) The mortgagor shall remain the registered proprietor of the land or interest unless and until foreclosure or other lawful vesting of title is effected in accordance with this ICT Code.

(b) Registration and Priority:

(i) All mortgages, sub-mortgages, charges, and other security interests over land or registrable estates shall be registered in the ICT Land Registry to have legal effect against third parties.

(ii) The priority of registered security interests shall be determined by the order of registration, unless expressly subordinated by agreement or order of the ICT Court.

(iii) The Operator may authorise the use of priority notices, caveats, or other protective instruments to preserve intended security interests pending registration.

(c) Formal Requirements:

(i) All mortgages and security instruments shall be effected in accordance with this ICT Code and any supplementary ICT Land Registry regulations.

(ii) Instruments shall clearly identify the secured property, the parties, the obligations secured, and any power of sale, enforcement, or redemption terms.

(iii) Instruments may be executed in any format agreed by the parties. However, only electronic or digital instruments acceptable to the Land Registrar shall be eligible for registration and legal effect against third parties.

(d) Enforcement and Foreclosure:

(i) A mortgagee shall not take possession, sell, or foreclose upon mortgaged land except in accordance with the enforcement provisions of this ICT Code or an order of the ICT Court.

(ii) The Operator may issue regulations governing foreclosure procedures, including notice periods, forced sale mechanisms, and mortgagor protections.

(iii) Where foreclosure results in transfer of title, registration of the new proprietor shall only occur upon provision of all required documentation, including any court order or foreclosure instrument.

(iv) The ICT Court may review foreclosures to ensure foreclosures are conducted with fairness, procedural safeguards, and equitable compensation where appropriate.

(e) Discharge and Release:

(i) A registered mortgage or security interest shall continue in effect until formally discharged or released, either by the mortgagee, their successor in interest, or the ICT Court for good cause upon petition by an interested party.

(ii) A discharge instrument, in the approved form, shall be lodged with the ICT Land Registry.

(iii) Upon acceptance and verification by the Operator or the Land Registrar, the ICT Land Registry shall be updated to reflect the discharge, and the property shall be free of that encumbrance.

(iv) The Land Registrar may issue regulations regarding discharge procedures and electronic release mechanisms.

(f) Operator’s Regulatory Authority:

(i) The Operator may issue supplementary Land Registry regulations regarding:

(ii) Acceptable forms and templates for mortgage instruments;

(iii) Priority arrangements and intercreditor agreements;

(iv) Registration of future advances or revolving credit mortgages;

(v) Sub-mortgages, equitable mortgages, or alternative secured arrangements;

(vi) Electronic foreclosure systems, including auction or notice mechanisms; and/or

(vii) Discharge, partial release, and variation of registered securities.

(viii) The Operator may also establish integration protocols for programmable or tokenised mortgage interests that comply with this ICT Code.

(g) Subrogation, Subordination, and Future Advances:

1. A person who discharges a prior registered mortgage in full or in part, and who does so under a legal or contractual obligation (e.g. guarantor or indemnifier), shall be entitled to be subrogated to the rights of the prior mortgagee, unless otherwise agreed.
2. Registered mortgages may include terms for future advances or revolving credit. Such advances shall retain the original mortgage priority where expressly stated in the instrument and registration.
3. Any express subordination agreement between mortgagees shall be effective where:
4. Recorded in writing and signed by the subordinating party; and

5. Registered in the ICT Land Registry using the prescribed instrument.

   (h) Severability of Obligations and Partial Discharge:

   (i) A registered security interest may secure multiple obligations or parties and may be discharged in whole or in part.

   (ii) The Land Registrar shall, upon request and supporting documentation, record the partial release of any registered security without extinguishing the remainder of the instrument.

   (i) Effect of Errors and Omissions in Registration:

(i) Clerical or minor errors in registered security instruments shall not invalidate the underlying security interest, provided the identity of the property, parties, and obligations can be reasonably ascertained.

(ii) The Land Registrar may correct such errors upon application, subject to procedural safeguards and notice requirements as may be published by the Operator or the Land Registrar in supplemental regulations or guidance.

(iii) Any party prejudiced by a material error may seek redress through the ICT Court.

(j) Rights of Redemption and Reinstatement:

(i) A mortgagor shall retain the right to redeem the mortgaged property by satisfying the secured obligations in full, along with any lawful enforcement costs, at any point prior to the completion of foreclosure or transfer of title.

(ii) Where a default has occurred, a mortgagor may reinstate the mortgage by curing the default and restoring the position, provided this occurs prior to foreclosure and is not expressly excluded by the terms of the instrument.

(iii) Any purported waiver or exclusion of the right to redeem shall be construed narrowly and may be set aside by the ICT Court where unconscionable, procedurally defective, or inconsistent with this ICT Code.

(k) Cross-Collateralisation and Security Consolidation:

(i) A single mortgage instrument may secure multiple obligations, including cross-defaults or debts of affiliated parties, if expressly stated and recorded.

(ii) Security instruments may apply to multiple parcels or strata, and the ICT Land Registry shall enable notation and linkage of cross-collateralised securities.

(iii) Enforcement against one secured property shall not constitute or imply release of other secured properties unless explicitly discharged or agreed by the parties.

(l) Enforcement Standards and Good Faith Obligations:

(i) A mortgagee exercising a power of sale or other enforcement right shall act in good faith, exercise reasonable care, and take reasonable steps to obtain market value or fair consideration.

(ii) Where enforcement is conducted in a manner that is manifestly unfair, collusive, or amounts to unjust enrichment, the ICT Court may grant relief, including rescission, compensation, or setting aside the transaction.

(m) Constructive Security Interests and Deposit of Title:

(i) Security interests may arise by deposit of title, equitable charge, or other informal arrangement if recognised under this Code, supplemental Operator or Land Registrar regulation, or by order of an ICT Court.

(ii) No such interest shall be effective against third parties unless registered in the ICT Land Registry or protected by caveat or ICT court-ordered injunction.

(iii) The ICT Court shall balance commercial custom and technological advancement in determining the legal validity and enforceability of non-standard or hybrid security instruments.