Overview

This Bill introduces a new type of non-possessory security interest over goods, called a "goods mortgage," replacing the outdated Bills of Sale Acts 1878 and 1882. It sets out the rules for creating, registering, and enforcing these mortgages, protecting both lenders and borrowers.

Description

The Bill establishes a framework for goods mortgages, allowing individuals to use their goods as collateral for loans or other obligations. Key aspects include:

• Creation of Goods Mortgages: Individuals can create a goods mortgage over tangible, movable property (excluding certain items like aircraft and currency). The mortgage must be in writing, meet specific requirements, and not secure certain types of obligations (like those arising from employment contracts or personal services).
• Registration and Third-Party Rights: A register of goods mortgages will be maintained by the Secretary of State. Registration provides priority in case of multiple mortgages over the same goods. The Bill also clarifies the responsibilities of goods owners to disclose existing mortgages to purchasers.
• Rights of Mortgagors and Mortgagees: The Bill outlines the rights and responsibilities of both the lender (mortgagee) and borrower (mortgagor). It details when a mortgagee can take possession of the goods, including required notices and protections for the mortgagor. It also provides for a mortgagor's right to terminate the mortgage under certain conditions.
• Repeals: The Bill repeals the Bills of Sale Acts 1878 and 1882, which are considered outdated and inadequate for modern financial practices.

Government Spending

The Bill doesn't directly specify government spending figures. However, it will likely lead to some costs associated with establishing and maintaining the register of goods mortgages, as well as potential legal and administrative expenses related to enforcement.

Groups Affected

• Individuals: Individuals who borrow money using their goods as collateral will be directly affected. The bill aims to provide them with stronger protections.
• Lenders: Lenders will have a new legal framework for securing loans against goods.
• Businesses: Businesses involved in financing or lending, and potentially those dealing in second-hand goods, may be affected by the changes in secured lending practices.
• The Courts: Courts will have a new area of legal cases to handle relating to goods mortgages.
• Secretary of State and Treasury: These bodies will have responsibilities for the creation, maintenance and regulation of the register of goods mortgages.

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