14Limitation on rights of mortgagees

14 Limitation on rights of mortgagees

(1)  This section applies to a mortgage subsisting at the date of the proclamation of property that is or includes an estate or interest in any land subject to a proclamation under section 3 (1) .

(2)  Subject to this section, a mortgage to which this section applies has effect as if the principal secured by the mortgage were reduced by one-quarter of that portion of the principal that on the date of the proclamation still remains due to be repaid, and where any part of the principal secured by the mortgage falls due to be paid on or after that date the mortgage has effect as if that part were proportionately reduced.

(3)  Where, after the date of the proclamation, any further sum is lent or advanced on the security of a mortgage that was subsisting on that date, nothing in this section (other than subsection (7) ) prejudices or affects the rights, liabilities, or obligations of any person with respect to the recovery or payment of that sum, and accordingly for the purposes of subsection (2) that further sum shall be deemed not to form part of the principal secured by the mortgage.

(4)  Where any such further sum as is referred to in subsection (3) is lent or advanced on the security of a mortgage it shall be assumed, for the purpose of determining for the purposes of subsection (2) the portion of the principal secured by the mortgage that on the appropriate date remains due to be repaid, that any payment made, or assumed by virtue of subsection (5) to have been made, by way of repayment of principal was applied to the repayment of that further sum and to the other principal moneys secured by the mortgage in the proportion that, immediately before that payment, the amount of so much of that further sum as then remained due to be repaid bore to the amount of the other principal moneys secured by the mortgage that then remained due to be repaid.

(5)  For the purpose of determining for the purposes of subsection ( 2 ) the amount by which the principal secured by a mortgage, or any part thereof, is to be reduced it shall be assumed that all payments due under the mortgage before the appropriate date have been paid on the date on which they became due and that the covenants and other terms and conditions of the mortgage have been duly observed.

(6)  *[Section 14 Subsection (6) amended by No. 105 of 1971, s. 5 ]*Nothing in affects the operation of a mortgage with respect to the payment of interest on the principal secured by the mortgage, or any part thereof, except that no interest otherwise required to be paid under the mortgage shall be required to be paid or be regarded as accruing, in respect of any period commencing on or after the date of the proclamation, on that part of the principal secured by the mortgage that by virtue of this section is not required to be repaid.