Thursday, July 5, 2012

Mortgagee evictions

The night before last, Ten News had a distressing story about four families evicted from their homes in Silverwater by a mortgagee, after their landlord defaulted on his loans.

There's some good news now: Mission Australia has helped the families out with temporary accommodation and other assistance. Thanks goodness – it is cold and wet in Sydney tonight.

Eviction by a mortgagee is a real worry, and it can happen to anyone. If you rent, you typically won't know whether your landlord owns the property subject to a mortgage (mind you, most landlords do); and you typically won't know whether your landlord is in trouble with the mortgagee – at least, not until the trouble is intractable and the mortgagee is taking proceedings for possession of the property.

We started to see worrying numbers of evictions by mortgagees in the mid-2000s – and back then, many of those who were evicted got no notice of it at all. To ensure that tenants got at least some notice, the law was changed in 2009 – and those changes were revised and strengthened in the new Residential Tenancies Act 2010. The changes to the law mean that scenes like those on the news should not happen now.

Under the current law, you are entitled to receive notice from a mortgagee if they take proceedings against your landlord for possession of the property (s 124). Even if you don't get this notice, you are entitled to notice from the NSW Sheriff that a possession order has been made and that you will need to move out. The Sheriff must give you not less than 30 days' notice (Sheriff Act 2005, s 7A(3)). During the 30 day period, you can move out at any time, and you don't have to pay rent (Residential Tenancies Act 2010, s 122(2)(a)). (Your tenancy, in fact, ended when the Court made the possession order.) After the 30 days, the Sheriff will return and evict you, if you're still there.

According to the news report, the Sheriff did indeed notify the tenants of the pending evictions. The problem, reportedly, is that the agent then told the tenants that the trouble with the mortgagee was sorted out, and that they should stay put. Again according to the news report, the agent did so on the advice of the landlord.

Any agent who passes on that sort of advice to tenants, in these sorts of circumstances, is an idiot.

If you ever find yourself in this situation, always take the Sheriff's word over the agent's or the landlord's. If the Sheriff gives you notice that you will have to leave, prepare to leave. If the agent or landlord says not to worry, it's all sorted out, stay put, do not believe them – contact the Sheriff, and ask if they've been instructed by the mortgagee not to carry out the eviction. Unless the Sheriff says otherwise, you will have to leave.

There's a few other provisions relating to evictions by mortgagees that may be useful – read the factsheet, and contact your local Tenants Advice and Advocacy Service for more information. 

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