Mortgagee obtaining possession without court proceedings

Although court proceedings are typically initiated in order for the mortgagee to gain possession, that does not need to occur in every case. The mortgagor may agree to voluntarily hand over possession of the security property, the mortgagee may take possession by way of “self-help”, or there may be a tenant already in occupation of the premises which the mortgagee does not wish to disturb, but to convert to being a tenant of the mortgagee.

Self-help involves a mortgagee physically entering on the premises to take possession. This is a dangerous process if the premises are occupied as if the occupiers resist, the mortgagee may end up inadvertently committing crimes such as forcible entry or assault, and the courts view dimly attempts to take possession through any form of force. If, however, the security property is vacant land, taking possession by self-help is relatively risk-free and is likely to be the best course. Self-help is open to a registered mortgagee but not an unregistered mortgagee.

A mortgagee can take possession of land occupied by a tenant by giving the tenant a written notice explaining that the mortgagee is taking possession, and that the tenant should now pay rent to the mortgagee, which the tenant is then obliged to do.

This guidance note overviews each of these matters, and is designed to be a good starting point for legal practitioners who need to consider matters relating to a mortgagee obtaining possession without court proceedings.

See Mortgage obtaining possession without court proceedings.