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Mortgage over leases
The grant by a tenant of a mortgage over the lease occurs when a tenant obtains a loan and the mortgage over the lease forms the security of the lender over the tenant's assets or business.
On default by the tenant, the mortgagee may enter into possession of the premises and conduct the tenant's business and dispose of the business and of the lease. The obligation of the mortgagee to the landlord depends on whether the mortgagee is in possession and may be limited by the relevant legislation.
Victoria
If the tenant of a registered lease becomes bankrupt and the tenant’s trustee disclaims the lease, the mortgagee may apply to the registrar to record the disclaimer, which then operates as a foreclosure and transfer to the mortgagee of the interest of the bankrupt in the lease: s 68(1), Transfer of Land Act 1958 (Vic).
See Mortgages over leases.
