New Protections for Farmers against big Banks

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From 1 July 2018, the Farm Business Debt Mediation Act 2017 (Qld) “the Act” will bring about restrictions on mortgagees taking enforcement action under a farm mortgage until parties have conducted mediation.
The purpose of the legislation is to provide an efficient and equitable way for farmers and mortgagees to resolve matters relating to farm business debts, before a mortgagee can take possession and sell the property.

Who does it apply to?

The legislation applies to farms in Queensland. However, Victoria has had similar legislation since 2011 and New South Wales has had similar legislation since 1994. So, Queensland is still catching up!
It applies to all ‘farm mortgages’; which are simply any registered mortgage over farm property. The legislation doesn’t just apply to banks but extends to anyone who has loaned money to a farmer secured by a mortgage over farm property.

What does it require?

Where the legislation applies, a mortgagee is unable to take enforcement action (to say take possession and sell the property), without first serving a notice to the farmer informing them of their intention to take enforcement action and the farmer’s right to request a mediation.
The aim of the mediation is to bring about an agreement between the parties about matters relating to the farm business debt.

When can a bank take enforcement action?

If the farmer fails to mediate or once parties have gone through the mediation process and the mortgagee is still entitled to take enforcement action, then the mortgagee may apply to obtain an exemption certificate. Once they have an exemption certificate, they are able to enforce their mortgage.
Unless the legislation doesn’t apply, or an exemption certificate is not obtained, any enforcement action taken over a farm mortgage has no effect.
Please contact us of you have a mortgage over farm property in Queensland which you would like to enforce or if you are a farmer with a farm mortgage who is needing assistance in dealing with your bank or mortgagee. New protections may be in place but it is important you discuss your legal standing with our team.