02:23 PM Alvin See (Assistant Professor, Singapore Management University)

    Mortgagee’s Right to Take Possession Subject to Existing Lease: United Overseas Bank Ltd v Loh Boon Hua [2015] SGHCR 9



    This case raises the interesting issue of whether a mortgagee’s right to enter into possession of a mortgaged property upon the mortgagor’s default is subject to a prior and existing lease. The determination of this issue has important implications given Singapore’s sizeable rental market and the absence of prohibition against a landlord mortgaging a property that is already rented out.


    On 24 February 2014, Mr Loh mortgaged his property (‘the Property’) to United Overseas Bank Ltd (‘UOB’) to secure the extension of a refinancing housing loan granted by the latter. When Mr Loh applied for the loan, he informed UOB that the Property was leased to one Mdm Ding for the duration of two years, beginning 1 August 2013 and ending 31 July 2015. The lease agreement provided that the rent was to be paid on a monthly basis. 

    Soon after, Mr Loh became a bankrupt on his own application and defaulted on repayment of the debt owed to UOB. UOB then sought to exercise its power to enter into possession of the Property pursuant to section 75 of the Land Titles Act (Cap 157, Rev Ed 2004) (‘LTA’). Written notices were sent to both Mr Loh and Mdm Ding to inform them of this intention. As the proceedings progressed, however, UOB softened its position. UOB was willing to accept that its power to enter into possession of the Property was subject to the Mdm Ding’s lease, but only to the extent that Mdm Ding continues to make monthly rent payments to UOB for the remaining term of the lease.

    Mdm Ding was not added as a party to the proceedings. However, in one hearing, Mdm Ding’s representative informed the court that Mdm Ding has already paid the rent to Mr Loh in full. The court was convinced that this was true. Thus, Mdm Ding took the position that if she were ordered to vacate the Property, she would require a refund of the advance payment. Mdm Ding is also unwilling to make further rental payments to UOB.

    Decision and commentary

    Colin Seow AR ordered that UOB is entitled to enter into vacant possession of the Property only on 1 August 2015, after the expiry of Mdm Ding’s lease. 

    In arriving at this conclusion, the court had its attention on whether there is a valid ground for early termination of Mdm Ding’s lease ([18]), which is addressed by asking whether UOB was entitled to further payments of rent from Mdm Ding ([26]–[31]). This was clearly due to the way in which UOB argued its case, which could be simply stated. According to UOB, it is not bound by the arrangement between Mr Loh and Mdm Ding, which was strictly a private matter between the two. It argued that it was entitled to payments of rent for the remaining duration of the lease in accordance with the original term of the lease, and that since Mdm Ding had refused to continue paying rent, this gave rise to a ground for early termination of the lease.   

    Curiously, in the subsequent parts of the judgment, the court focused mainly on explaining why it is unhelpful to UOB’s case to analogise the right of a mortgagee to that of a receiver in relation to the collection of rent ([21]–[25]). According to section 29 of the Conveyancing and Law of Property Act (Cap 61, Rev Ed 1994) (‘CLPA’), which empowers a mortgagee to appoint a receiver upon the mortgagor’s default, the appointed receiver shall be deemed to be the agent of the mortgagor. Thus, if the tenant has already paid the mortgagor in full, there is no basis for the receiver, who is merely the mortgagor’s agent, to demand further payments ([22]). On the other hand, a mortgagee who has given notice of his intention to enter into the receipt of rents (pursuant to LTA, s 75(4)) does so in its own right, not in the capacity of the mortgagor’s agent ([24]). Having made this distinction, the court said that it was ‘convinced that a tenant should not be made to suffer the peril of paying rent twice over if rent had already been advanced in full to the mortgagor as landlord’ ([32]). 

    The precise basis for the court arriving at the stated conclusion is not entirely clear. However, it is undoubtedly correct. UOB’s interest under the mortgage, although a registered one, is automatically subjected to Mdm Ding’s unregistered lease (the lease was unregistrable: LTA s 87(2)) that arose earlier, as clearly provided under section 46(1)(vi) of the LTA. However, this is not to say that UOB has no recourse at all against Mdm Ding if the latter commits a default. Of particular relevance to the present case is section 75(3) of the LTA, which states:

    Subject to this section, a mortgagee … shall have the like remedies for obtaining possession of the mortgaged … land as are by law given to a landlord against a lessee or tenant … whose rent is in arrear.

    Thus, while the court is correct to point out that the mortgagee does not act in the capacity of the mortgagor’s agent in attempting to collect rent from the tenant, the mortgagee’s remedies against a defaulting tenant mirror those of the mortgagor. Thus, the important question here is whether Mdm Ding has breached a term of the lease so as to justify termination of the lease by Mr Loh. This was clearly answered in the negative. It follows that UOB has also no right to terminate Mdm Ding’s lease. 


    This case reminds us of the strength of a tenant’s interest where the lease is obtained before the land is mortgaged. This is notwithstanding that the lease in question is a short-term lease, which is sometimes regarded as a lesser interest that is closer to a contractual interest than to a property interest (see Tan Soo Leng David v Lim Thian Chai Charles & Anor [1998] 2 SLR 923, but note that in that case the distinction was made for a different purpose). The position is quite different if the mortgage precedes the lease. In such a case, unless the lease is expressly or impliedly allowed by the mortgage or is consented to by the mortgagee, it does not bind the mortgagee even if it is registered (LTA, s 89).

    * This blog entry may be cited as Alvin See, "Mortgagee’s Right to Take Possession Subject to Existing Lease: United Overseas Bank Ltd v Loh Boon Hua [2015] SGHCR 9", Singapore Law Blog (19 May 2015) (

    ** A PDF version of this entry may be downloaded here

Comment Section