1. I received a letter from a bank claiming to be the mortgagee of the property that I am renting. The bank claimed that the tenancy document between my landlord and me was made without its consent and asked me to move out of the property. What can I do?
All properly drafted mortgages may contain a clause that requires the mortgagor (the landlord) to seek consent from the mortgagee (the bank) before the mortgagor lets the property to another party (the tenant).
If the landlord complies with this requirement, then the bank has notice of and consented to the tenant’s presence and may not evict the tenant even if the bank eventually exercises its power of repossession (or forfeiture) under the mortgage upon any default on repayment. The bank, under such circumstances, will become the landlord and is entitled to receive rent from the tenant.
If the landlord lets a mortgaged property to a tenant without obtaining the bank's consent, then the landlord is in breach of the mortgage and the property is liable to be repossessed by the bank. When the bank eventually exercises its power of repossession under the mortgage, the tenancy agreement may not be effective to protect the tenant’s interest against the right exercisable by the bank. In such event, the tenant may become a trespasser on the property and the bank is perfectly entitled to ask the tenant to leave even if the tenant is prepared to pay the rent.
As a mortgage will invariably be registered with the Land Registry, the tenant is deemed to have notice of the mortgage and its terms. If the bank exercises its power of repossession under the mortgage, then the tenant cannot use ignorance as an excuse. Therefore, before entering into a tenancy document, a tenant should always conduct a land search at the Land Registry to check whether the property is mortgaged. If the answer is affirmative, then the tenant must ensure that the landlord has obtained consent from the mortgagee.