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Sitting tenant - landlord mortgage default ?

  • 01-12-2016 11:26am
    #1
    NUTLEY BOY
    Registered Users, Registered Users 2 Posts: 2,345 ✭✭✭


    Not a request for advice - just a general question on the relevant principles.

    I have heard of a few instances recently where an existing tenant in a property has been effectively thrown out because the landlord has defaulted on the mortgage on the property and it has been taken over by a receiver on behalf of a bank.

    Suppose, for purposes of discussion, that the tenancy is completely legitimate and that there are no problems within the contract as between landlord and tenant.

    Can a receiver, purporting to act on behalf of the bank holding the defaulting mortgage, terminate the tenancy agreement with the tenant and effectively determine or extinguish it ?

    Q1. If yes, on what basis ?

    Q2. What rights, if any, does the tenant have in this scenario ?


Comments

  • #2
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    The answer is that most mortgages require the landlord to obtain the written consent of the bank prior to a lease. A lease given to the tenant in these circumstances is void as regards the bank. This applies to te majority of leases of residential property. What has yet to be tested in court is, if the property is registered with the RTB does this mean it can only be terminated in accordance with the provisions of the Residential Tenancies Act. It seems that if the receiver recognises the tenancy then he must proceed in accordance with the Act.

    http://www.courts.ie/Judgments.nsf/0/1AAFD19CF05DF00480257E610049DC4B

    Ultimately a case will be need to be heard to finally resolve this issue.


  • #3
    scudzilla
    Registered Users, Registered Users 2 Posts: 11,959 ✭✭✭✭scudzilla


    So if a landlord just rents his house out to a tenant without informing bank/mortgage company, said landlord is then in default and home gets repossesed, the tenant has not rights and has to move out straight away???


  • #4
    Peregrinus
    Registered Users, Registered Users 2 Posts: 26,998 ✭✭✭✭Peregrinus


    No, if the bank want him and he doesn't agree to go out they have to evict him in the usual way, which takes time.

    But, the point is, in the heel of the hunt they can successfully evict him. They are not bound by the lease (unless they consented to it or, unusually, the mortgage agreement allows the property to be leased without the bank's consent) and they can terminate it and seek vacant possession if they want to sell the property.

    They don't always want to do that - at least, not immediately. Back in the depths of the property slump I had a friend living in a rented house, which the bank repossessed when the landlord defaulted. The bank didn't want to sell into an extremely depressed market, so my friend not only stayed on, but negotiated a reduced rent with the bank.


  • #5
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    Peregrinus wrote: »
    No, if the bank want him and he doesn't agree to go out they have to evict him in the usual way, which takes time.

    .

    Receivers have physically tossed people out on the street. At the moment everything depends on the bank's attitude. The RTB is on the side of the receivers the whole way.


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