A tenant can be affected by the assignment of certain rights from their landlord (as mortgagor) to the lender (as mortgagee) as security for the loan.

How a tenant can be affected by their landlord’s mortgage

If your landlord fails to pay back the borrowed money according to the loan contract, then the mortgagee 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 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 mortgagee (since 19 June 2009)
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 mortgagee 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.

30-day notice to vacate

The mortgagee is required to give you at least 30 days written notice of the date on which the Sheriff wil attend to evict you. (This requirement applies from 19 June 2009).

Do not assume that the mortgagee knows this. Write them a letter telling them of your situation and of this requirement.

If you receive notice from the Sheriff without first receiving the 30-day notice, contact your local TAAS or community legal centre immediately.

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.

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 – 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 CTTT 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 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 action.

From 19 June 2009

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.

Other things to note

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).

Contacts

NSW Department of Lands: phone 1300 052 637 or see www.lands.nsw.gov.au
Community legal centres: phone 02 9212 7333 or see www.nswclc.org.au/clcs.html for your local centre

Updated: June 2009

Further help

Your local Tenants Advice and Advocacy Service: www.tenants.org.au/publish/contact-us
Other factsheets: www.tenants.org.au/publish/factsheets
NSW Fair Trading Information Centre: 133 220

The information in this factsheet:
• is intended as guide to the law and should not be used as a substitute for legal advice
• applies to people who live in, or are affected by, the law as it applies in New South Wales, Australia.
© Tenants' Union of NSW.