# Landlord in mortgage arrears: Implications for Tenant's Rights?



## taxdodger (19 Apr 2013)

Hi,

I've accidentally found out my landlord is almost 2 years in arrears on her mortgage.

I have rented the property for 1.5 years. I signed a 6 month lease initially so I presume I'm under part 4 residency. What would my rights be if the property was repossessed?

Also how likely is it that the property will be repossessed? As someone who has no experience in these matters, I've no idea what timescale banks give to someone to start paying their mortgage again.

Should I start looking at other places?

Thanks for any help.


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## facetious (19 Apr 2013)

If the landlord does not have permission from his/her mortgage company, your lease may be invalid.

However, repossession of a property takes a long time and first of all, you would be likely to get a letter from either the mortgage company / receiver or some other duly appointed body, to pay the rent to them and not to the current landlord.

I am sure that you probably have many months more before anything will happen.

However, the "appointed" body could certainly serve you with a Notice of Termination, but that would have to give you 42 days notice.

Personally, knowing that I will have to vacate, I would start looking for something really suitable as regards location and price. Take your time and don't rush into it.


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## facetious (19 Apr 2013)

In spite of not having a valid lease, the tenant would acquire a Part 4 tenancy after six months.

However, I think that any fixed term lease could be invalid - depending on the wording in the mortgage contract. I am sure that the majority of those will have a clause prohibiting rent out the property due to the fact that a tenant would have different rights to an owner occupier.

Reading other forums, the conclusion was that if the owner did not have written permission to let a property, any lease agreement could be invalid, though the RTA 2004 would probably over-ride anything else, in favour of the tenant's rights.

A mortgage company would probably be happy to receive the agreed rent for a number of months anyway.


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## facetious (20 Apr 2013)

khards said:


> I would tell the landlord that you have been told by the receiver to pay them rent, then keep the rent for yourself.



*This is poor advice.*

The fact that the OP has paid rent and the owner/landlord has accepted that payment indicates that a tenancy exists. The tenant is covered by the RTA 2004, as a minimum. 

However, if there was no permission from the mortgage company the terms and conditions of a fixed term lease may be invalid. The RTA 2004 gives the tenant certain minimum rights and a receiver may have the right to evict a tenant under the grounds provided for in the RTA 2004, as the fixed term conditions do not apply with an illegal agreement.


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## ajapale (20 Apr 2013)

Mod Note: Ive removed one pro tenant post and one pro landlord post both of which used perjorative language.

Can we assume for the purposes of this thread that both the landlord and tenant are acting in good faith and are good honest upstanding individuals?

And to restate the question: _*"What (if any) are the implications for a tenant if the landlord is not meeting his mortgage repayments?"*_

aj
moderator


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## Gerard123 (21 Apr 2013)

In simple terms no particular implications. Mortgage Relationship is between landlord and bank nothing to do with you. Just because mortgage is in arrears does not mean landlord not trying to do his best and pay as much as he can. You do not have any agreement with bank.
Concern for you is possibly to do with the uncertainty that might arise depending on how events progress?  If the bank decide to seize house and/or a receiver requires that you pay the bank the rent and not the landlord? Has that happened?  Doesn't sound like it. 

And even if it did you may well stay in the house at banks request so that they get some rental flow or if you had to leave if the house was being sold you would get a reasonable notice period as required.

Sounds to me like you should stay put if you're happy with the house, continue paying the rent to the landlord and importantly get receipts for the rent paid or better again pay it through a bank account. Otherwise no point in getting worried at this stage, unless I have misunderstood something.also check house registered with prtb.


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## facetious (21 Apr 2013)

One point comes to mind and that is the security of your deposit. If the house is eventually repossessed and you then leave, who is liable to return your deposit - the landlord will not and the receiver may or may not.

As regards the receiver returning your deposit, I have seen on another forum where some posters reckoned that the receiver had to and others said that as he had not received the deposit, he did not have to.

So, if the OP decides to remain in the property he will probably have this problem.


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