This factsheet explains what to do if you get a letter or notice about a mortgage and the premises you are renting.

What is a mortgage?

A mortgage is a form of security that can be given in relation to land. Mortgages are used as security for borrowed money. This factsheet discusses the situation where, in order to borrow money from a lender (mortgagee), the landlord (mortgagor) has given some rights about the property to the lender as security for the loan.

Mortgages should be registered with the Department of Lands.

How does my landlord’s mortgage affect me as a tenant?

If your landlord fails to pay back the borrowed money according to the loan contract, then the mortgagee/lender has rights to get 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 your landlord defaults on their mortgage

After your landlord has defaulted on payment of the mortgage/loan contract, there are six documents likely 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 possession to the mortgagee (note the date for possession)
• notice from the Sheriff that a writ for possession will be executed
• 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. 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.

If you are not sure that it is a registered mortgagee, do a title search at the Department of Lands. Get advice from your local TAAS before paying the rent.

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 1987. 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 possession

You may or may not see a copy of this document. If you do, note the date for possession and ensure you move out by that date. If you disobey the order, you can be evicted by the Sheriff.

Notice from the Sheriff

If the Sheriff is going to evict you according to a court order, you should get a warning telling you the date that they will attend.

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. A Sheriff’s Officer is the only person who may lawfully remove you. Do not resist them. Police can help them if you resist.

If the Sheriff is coming and you have not found somewhere else to live, try to remove your goods to storage. It can be hard to get access to the premises remove your goods 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, there are special circumstances that may allow the Supreme Court or the Consumer, Trader and Tenancy Tribunal (CTTT) to order that the mortgagee become your landlord. Get advice from your local TAAS if you think you have special circumstances.

If you have notice of Supreme Court proceedings, you cannot apply to the CTTT 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 legal action.

Updated: June 2008

Further help

Tenants NSW website: www.tenants.org.au
Tenants Hotline: 02 8117 3750 or 1800 251 101
Tenants Advice and Advocacy Services: see the Tenants NSW website or call the Tenants Hotline to find your local general or Aboriginal service Renting Services (NSW Office of Fair Trading): 133 220

Other factsheets

This is one of a series of factsheets on tenancy issues. Other factsheets are available from www.tenants.org.au/publish/factsheets/ or your local Tenants Advice and Advocacy Service.