Disclaimed real property may not escheat to the Crown

No Qld Government, a Bankrupt’s disclaimed land does not automatically revert (“escheat”) to you, according to a Federal Court case handed down on 19 March.

The Bankruptcy Trustee in question had disclaimed real property (per s133 Bankruptcy Act). Meaning the Bankrupt lost legal title to the land.

The real property was the subject of a mortgage in favour of the ANZ Bank.

The issue arose because as the land had been disclaimed, there was a question on whether the disclaimer was said to also apply to ANZ’s mortgage.

If that was the case, then the land would escheat to the Government.

The Court held that was not the case. Rather, the better view was that the legal title is held by the QLD Government on trust for the ANZ.  


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