Mortgagees and Tenants

What is a mortgage?
Mortgages are used as security for borrowed money in relation to property. The borrower is the mortgagor and the lender is the mortgagee. Mortgages should be registered with the NSW Land & Property Management Authority (LPMA).

How the landlord’s mortgage can affect you If your landlord fails to pay back the borrowed money according to the loan contract, then the mortgagee has rights to take control of the premises to take your rent, take possession and sell the property. If you receive letters or notices from someone claiming to be a mortgagee for the premises, contact a Community Legal Centre or Tenants Advice and Advocacy Service (TAAS) immediately for advice.

In most cases, the mortgagee can succeed in ending your tenancy by getting an order of the Supreme Court for possession of the premises. If the landlord defaults on their mortgage After your landlord has defaulted on payment of the mortgage/loan contract, there are 7 documents likely to be relevant to your situation:

  • demand for rent from the mortgagee
  • demand for possession from the mortgagee
  • notice to occupier of Supreme Court proceedings (note the file number)
  • court order for mortgagee possession (note the date for possession)
  • 30-day notice to vacate, from the Sheriff
  • writ for possession.
    Each of these is explained below.

Demand for rent
The mortgagee may make a demand for rent under the Real Property Act 1900. You should check that the mortgagee is registered – do a title search at the LPMA. Get advice from your local TAAS before paying the rent. If the demand is from a registered mortgagee, you should:

  • provide a copy of the demand letter to the landlord/agent
  • pay the rent according to the demand
  • get, and keep, a receipt for every payment. In this situation receipts from the landlord or real estate agent do not work – you owe the rent to the mortgagee.

Demand for possession
The mortgagee may demand possession of the premises, but cannot force you to leave without a court order. It is important that you do not leave until there is a court order otherwise you may have to pay the landlord compensation for abandoning the premises (see Factsheet 16: Ending tenancy early).

Notice to occupier of Supreme Court proceedings
The mortgagee is required to send this notice under the Residential Tenancies Act 2010. It will tell you the details of the Supreme Court matter, including the
court file number. You can negotiate with the mortgagee or their solicitor for a reasonable time to leave after the court order for possession has been made. If you make an agreement, get it in writing. If you cannot make a satisfactory agreement, write to the mortgagee or the solicitor telling them of your circumstances.

Court order for mortgagee possession
You may or may not see a copy of this document. If you disobey the order, you can be evicted by the Sheriff. 30-day notice to vacate The Sheriff is required to give you at least 30 days written notice of the date on which the Sheriff will evict you. During the 30-day notice period

  • You are not required to pay rent.
  • Rent you paid in advance for this period is to be refunded. You may apply to the Consumer, Trader and Tenancy Tribunal (CTTT) for repayment of such
    overpaid rent.
  • You may leave before the 30-day notice expires.

Writ for possession
This document from the Supreme Court requires the Sheriff to give possession of the premises to the mortgagee. A sheriff’s officer will carry the writ when attending to enforce the court order – they are the only person who may lawfully remove you. Do not resist them.

Police can help them if you resist.
If you have not found somewhere else to live, try to remove your goods to storage. It can be hard to access the premises after the mortgagee has taken possession. If you cannot remove all your goods to storage, pack daily necessities and valuable items that are easily portable.

Special cases
Information that may be relevant to your situation includes:

  • start date of your tenancy
  • fixed term of your tenancy, including options
  • the date the landlord gave the mortgage.

If the mortgage was given during your tenancy, get advice from your local TAAS or Community Legal Centre. If you receive a document about ‘foreclosure’ get advice from your local TAAS immediately. In a very few cases, the Supreme Court or the Consumer, Trader and Tenancy Tribunal may order that the mortgagee become your landlord.

Your local TAAS can provide advice on this. If you have notice of Supreme Court proceedings, you cannot apply to the Consumer, Trader and Tenancy Tribunal for the mortgagee to become the landlord – you must apply in the Supreme Court proceedings. This could mean paying the mortgagee’s legal costs if you lose in that application. Get legal advice before taking action.

Other things to note

  • The mortgagee can sign a rental bond claim form to have your bond repaid to you.
  • The mortgagee must negotiate with you for dates and times to show the premises to prospective buyers (see Factsheet 08: Access and privacy).
  • You can negotiate with the mortgagee for more time, or for a (new) residential tenancy agreement.
  • Once your tenancy agreement has terminated, you can claim the bond without anyone else’s signature (see Factsheet 03: Bond).
  • You can apply to the Supreme Court or the CTTT for the mortgagee to become your landlord (see ‘Special cases’ above).