Asked March 26, 2017

Rent in a mortgaged house

  • 5 Answers

We are students shifting in an independent house by being tenants, the owner himself told us that he has taken house loan of a particular amount (probably by mortgaging his house) Is it legal for him to rent us his mortgaged house ? What are the things we should be careful of? As we will have to pay a high security amount to him. What can we do if he will not be able to pay us back the security amount?

Answers 5

You can noting to care about mortgage only one thing you do to registered the leave and lisence agreement or at least notaize it.. Also take receipt of those security deposit of you paid it on cash.. If SD in cheque then you can keep account statement in this regards.

Agree Comment 0 Agrees over 3 years ago

1. Yes, it is legal of him to rent his mortgaged house.

2. You may have a agreement of shorter duration of 11 months instead of straight 22 or 33 months in order to minimise your risk.

3. You may not pay him the rent if it is still pending and/or you may have to file a suit in order to recover your security deposit.

Agree Comment 0 Agrees over 3 years ago


You no need to warry, because above mentioned problem is owner problem not your and no need to give higher amount for deposite.

He can give house on rent, if he is not paying you back the you have civil as well as criminal remedy to recover the money

While involving into agreement for rent mentioned it regarding security amount and owner will pay when you will left the rent house without any delay

Agree Comment 0 Agrees over 3 years ago




Dear Sir/madam,

There seems to be no problem in Letting out a property which is a mortgaged one. It is absolutely legal for you (being a tenant) to stay in a property that is mortgaged with the bank. Because if you are concerned about the fact that in future if anything goes wrong then you being the tenant will be the first one to be expelled from the house. We would suggest that don’t be bothered in this respect, your rights as a tenant are very well protected, even if the property is of a mortgaged nature. You enjoy the same rights of a property with a clear title.

However, in the things you need to take care about are actually none, except the fact that you are willing to pay an unreasonably high security amount. The legality of the security amount (pagdi) is zero. Meaning thereby, that the law does not protect the rights of one submitting security amount (high or low). Because of the fact that such an amount is illegal and finds no place under law. You need to understand one thing that not everything under normal day practice is legal. Therefore, taking a security amount from a tenant and the tenant willing to pay the same are all subjected to mutual agreement between the two. So, your concern of a possibility of not getting back the security amount is valid and to be taken care of, on your terms with the landlord.

Further, we would suggest that whatever amount you pay, may it be in the form of a security amount or a monthly rent – do keep the receipts intact and on a regular basis. If possible, take it in writing on a paper duly signed from the landlord that such and such amount is been taken from you (as a tenant) as against the security and maintenance of the apartment. Also, that this amount is liable to be given back to you at the time when the rent agreement expires and you are asked to leave the apartment – with a prior 15 days or 30 days of notice. Notice meaning prior intimation to both the parties to the agreement that the agreement is being terminated and the relationship of a tenant and landlord expires, this obviously happens when there is no intention to extend or renew the agreement.

As far as the protection under law for the tenants is concerned, legal provisions like Section 65A of the Transfer of Property Act, 1882[1]are available to you in case of any legal dispute. The section talks about the Mortgagor’s power to lease and that there are no issues when a mortgaged property is put up for rent.


[1]  (2) (b) Every such lease shall reserve the best rent that can reasonably be obtained, and no premium shall be paid or promised and no rent shall be payable in advance

Agree Comment 0 Agrees over 3 years ago

Pre -existing tenant that is before the creation of mortgage infavour of the bank cannot be evicted under the provisions of the SARFAESI Act 2002,  But tenancy after the creation of the mortgage , The tenant can be evicted by the bank following provision  of the SARFAESI Act.  This are the legal provision.u can take rent on your own risk.


Agree Comment 0 Agrees over 3 years ago

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