Section 52ZMAA — Veterans' Entitlements Act 1986: No negative equity guarantee

When adjusted value of assets is exceeded (1) If: (a) a person owes a debt to the Commonwealth under section 52ZC; and (b) neither subparagraph 52ZA(1)(e)(ii) nor subparagraph 52ZA(2)(e)(ii) applied to the person when the person made the request to participate in the home equity access scheme; and (c) either of the following events occur: (i) a person seeks to repay the debt; (ii) the Commonwealth seeks to recover the debt; and (d) at the time the event occurs, the amount of the debt exceeds the adjusted value of the person’s real assets; and (e) subsection (3) of this section does not apply; then: (f) the Commonwealth is not entitled to recover an amount (the excess amount) that exceeds the adjusted value of the person’s real assets; and (g) the debt to the Commonwealth, and the charge securing the debt, is discharged to the extent of the excess amount by force of this paragraph. Note: For the meaning of real assets, see subsection 52ZAAA(1). When adjusted value of charge is exceeded (2) If: (a) a person owes a debt to the Commonwealth under section 52ZC; and (b) subparagraph 52ZA(1)(e)(ii) or (2)(e)(ii) applied to the person when the person made the request to participate in the home equity access scheme; and (c) either of the following events occur: (i) a person seeks to repay the debt; (ii) the Commonwealth seeks to recover the debt; and (d) at the time the event occurs, the amount of the debt exceeds the adjusted value of the real property specified for the purposes of paragraph 52ZA(3)(c); and (e) subsection (3) of this section does not apply; then: (f) the Commonwealth is not entitled to recover an amount (the excess amount) that exceeds the adjusted value of the specified real property; and (g) the debt to the Commonwealth, and the charge securing the debt, is discharged to the extent of the excess amount by force of this paragraph. Circumstances in which excess amount may be recovered and debt is not discharged (3) This subsection applies if the Commission is satisfied that: (a) a charge or encumbrance over the person’s real assets or the specified real property is created or increased by, or with the express consent of, the person after the person begins to participate in the home equity access scheme which affects, or will affect, the ability of the Commonwealth to recover the debt owed under section 52ZC; or (b) the person engaged in fraud, or made a misrepresentation, in relation to the person’s participation in the home equity access scheme, including in relation to the person’s real assets or the specified real property. (4) The Commission may, by legislative instrument, make guidelines to be complied with in making a decision for the purposes of subsection (3). Meaning of adjusted value (5) The adjusted value: (a) for real assets—means the amount worked out by: (i) working out the market value of the assets in accordance with an instrument made under subsection (6); and (ii) adjusting that value in accordance with the instrument; and (b) for real property—means the amount worked out by: (i) working out the market value of the property in accordance with an instrument made under subsection (6); and (ii) adjusting that value in accordance with the instrument. (6) The Commission must, by legislative instrument, determine: (a) one or more methods for working out the market value of real assets for the purposes of subparagraph (5)(a)(i); and (b) adjustments to be made to the market value of real assets for the purposes of subparagraph (5)(a)(ii); and (c) one or more methods for working out the market value of real property for the purposes of subparagraph (5)(b)(i); and (d) adjustments to be made to the market value of real property for the purposes of subparagraph (5)(b)(ii). (7) Without limiting subsection (6), the determination may: (a) specify that adjustments are to be made in relation to specified kinds of charges or encumbrances over real assets or real property; and (b) determine different methods to be used and adjustments to be made in different circumstances.