Supreme Court Proceedings for Possession of Property:

A mortgagee has varies avenues available should a borrower default on their mortgage and loan agreement. These include foreclosure, power of sale, right to possession, right to appoint a receiver, right to lease and right to assign. The right to possession can be actual or constructive as the mortgagee can take physical possession or control in a way, in which they are effectively in possession. There are certain legislative requirements that the mortgagee must comply with in the process of seeking a Supreme Court order for possession. Proper legal advice in from a Debt Recovery and Insurance Lawyer may be of great assistance in this regard.

To be in possession of mortgaged property, a mortgagee does not need to be in physical possession. A mortgagee will be held to be in possession if it takes control of rents and profits in a way that effectively deprives or displaces the ability of the mortgagor to manage the property.

A legal mortgage of land held under old system title gave the mortgagee the right to legal possession (though any subsequent equitable mortgagee would have no right of possession). The holder of a Torrens title mortgage does not acquire the legal estate in the mortgaged land and, therefore, has no general law right to possession. However, the mortgagee has a statutory right to take possession of the property once there is default by the mortgagor in payment of the secured money, in the same manner as if the mortgage had been created by a conveyance of the relevant land: Real Property Act 1900 (NSW) s60. Under s60 of the New South Wales legislation and equivalent sections in other jurisdictions, the mortgagee is also granted the right to bring court proceedings for possession of the land. Second and later ranking mortgagees may also exercise these rights after default, provided this exercise is not inconsistent with the exercise by the first mortgagee of these rights. Obtaining proper legal advice from a Debt Recovery and Insurance Lawyer may be greatly beneficial if you are in the process of defending mortgagee repossession action.

In commencing court proceedings in the Supreme Court for possession of land, the mortgagor must comply with certain requirements. Of course, this includes the default and enforcement provisions of the mortgage agreement.  It also includes a written notice in accordance with s57(2)(b) of the Real Property Act 1900, and a Default Notice in accordance with s88 of the National Credit Code. Professional legal advice from a Debt Recovery and Insurance Lawyer may be of great assistance in ascertaining whether the mortgagee has acted properly.

A mortgagee in possession must account to the mortgagor for any rents or profits received while it is in possession. The mortgagee will also be liable for any rents or profits that should have been received during the period, but which were not received because of the wilful default or neglect of the mortgagee. The assumption underlying this principle is that a mortgagee who takes possession will have the intention of continuing the operation of any business carried on the mortgaged land. Where account must be made, only for rents but not for profits, there is an assumption that the property is producing, or can produce, a rental return. A mortgagee taking possession is not obliged to account to the mortgagor an occupation rent unless, as a result, the property cannot be leased to a third party. A mortgagee in possession may be directly liable for statutory charges relating to the property during the period of possession as the mortgagee may be deemed to be the owner under particular statutes.

If you would like further information or wish to discuss your mortgagee repossession matter with us please do not hesitate to contact us by telephone on (02) 9233 4048 or by email to info@navado.com.au. 

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