L's mortgagee checking who occupies premises

[craigfer]

Hello all

I'm a letting agent and my tenants have received a letter from a firm of Solicitors regarding and occupancy check on the property. I have not spoken to the landlord yet regarding this.

I'm presuming its mortgage arrears.

The letter states - how their client (Bank of Scotland) shall not be 'bound by any rights of occupation you may have' ie. tenancy agreement

Anyone have any advise for them - they have just signed another 6 month tenancy agreement in February its a couple and the girl is 7 months pregnant.

Any help you can give me would be great

[Mars Mug]

It seems like the owner (landlord) may have let the property without the permission of his mortgage lender.

[mind the gap]

Responsible letting agents check whether a LL is legally the owner of a property or has permission from his mortgage lender before they agree to market/manage it.

If you did not do that, then perhaps you could fastrack the couple into another of the properties on your books at a similar rent?

[tom999]

The letter states - how their client (Bank of Scotland) shall not be 'bound by any rights of occupation you may have' ie. tenancy agreement

Did LL obtain consent of mortgagee (M), before he let the property to T?
(a) If yes, M is bound by the tenancy. It can still sell the property, but that would be without vacant possession.
(b) If no, M is not bound by the tenancy; LL is in breach of mortgage conditions, by unlawfully subletting, and T has few rights.
(Under ground 2 in Schedule 2 of The Housing Act 1988)

Anyone have any advise for them - they have just signed another 6 month tenancy agreement in February its a couple and the girl is 7 months pregnant.

If (b), T's remedy is against LL only (not against M). LL is in breach of covenant for T to have quiet enjoyment: LL is in effect permitting M's right to possession which trample on T's rights.

Contact LL to confirm whether (a) or (b) applies. If (b), then T will need to find alternative accommodation at the earliest opportunity.

[dominic]

Bear in mind that whether or not LL has permission from M, M may still repossess and on that repossession the tenancy will come to an end, unless the tenants make successful representations during the repossession proceedings.

[Preston]

Bear in mind that whether or not LL has permission from M, M may still repossess and on that repossession the tenancy will come to an end, unless the tenants make successful representations during the repossession proceedings.

This isn't necessarily the case if the lender consented to the letting and/or the lending took place after the tenancy commenced. In either of these circumstances the lender will usually be bound by the terms of the letting if they take possession from the mortgagor.

[dominic]

This isn't necessarily the case if the lender consented to the letting and/or the lending took place after the tenancy commenced. In either of these circumstances the lender will usually be bound by the terms of the letting if they take possession from the mortgagor.

Hmmm.. not sure about that, but lack the motivation to investigate!

There might be an argument of estoppel... but other than that...

The rationale has always been lenders would refuse to lend if their rights or repossessing a vacant property were prejudiced, and so the balance was struck in this way.

[jeffrey]

But the mortgagee can repossess (i.e. effectively take-over L's ownership rights) without evicting T. 'Possession' includes receiving rents and profits.