A New South Wales tenant whose landlord failed to pay the mortgage faces housing uncertainty and court intervention.
In a post on Reddit, the tenant said their “landlord had not been making the required payment in full since earlier this year,” even though the tenants “have been making rental payment on time every single time.”
The Redditor, SBTSSS, posted on the AusLegal thread, after receiving a letter alerting them to the legal action by the home loan lender, asking about how much time the court would give them to move out in case it enforces possession of the property, Domain reported.
“So, my question is that if this unfortunate scenario does happen, how many days of notice is the court going to give us?” they said. “We are currently on a periodic tenancy so in NSW the landlord will need to give us 90 days’ notice, so is the court also going to give us 90 days or are they going to force us to move out immidately (sic)?”
Adding to Redditor SBTSS’ concern was that there were “barely any rental listings in our area at the moment.”
When a landlord defaults on their mortgage, a bank or lender can seize the property and put it up for sale to recover the loss. But first, it must apply to the Supreme Court for an order to take possession, at which stage, the tenant is notified of what has happened.
Data this year showed a slight increase in the number of distress property sales in Australia. Long-term figures from real estate agency Ray White revealed, however, that the rate of mortgagee sales is still much lower compared to the volume during the thick of the pandemic.
In the three months to July, the number of national mortgagee sales increased, along with the rise in interest rates, data showed.
Distressed listings reached a peak of more than 250 properties in October 2021, then steadily fell over six months to about April this year, Ray White found.
The degree of distress selling in Australia was in part due to a mortgage repayment freeze during the pandemic.
According to Fair Trading NSW, when a property is seized by a lender following a failure to pay the mortgage, a court can order a tenant to be evicted, regardless of how much time is left on their lease agreement, Domain reported.
The tenant is given a 30-day notice to vacate, and this timeframe can be negotiated.
A court sheriff can forcibly remove the tenant if they refuse to leave.
According to the Fair Trading NSW website, “as a form of compensation, the tenant doesn’t have to pay any rent for 30 days after they’re given the official notice to leave,” Domain reported.
