Sec. 301. When mortgagee is deemed to be in possession, p. 580.

Sec. 302. Rights of mortgagee in possession, p. 582.

Sec. 303. Right to reimbursement for expenses incurred, p. 584.

Sec. 304. Obligations of mortgagee in possession, p. 588.

Sec. 305. Liability for occupation rent, p. 589.

Sec. 306. Liability for rents and profits, p. 591.

Sec. 307. Liability for waste or deterioration, p. 594.

Sec. 308. Manner of taking accounts, p. 595.

Sec. 301. When mortgagee is deemed to be in possession

A mortgagee takes possession (a) when he deprives the mortgagor of the control and management of the mortgaged property. If the actual occupant is the mortgagor or a tenant under a lease from the mortgagor made after the mortgage, the mortgagee, if he is entitled to possession, may take possession by ejecting the occupant (b). If the occupant is a tenant under a lease which is paramount to the mortgage, the mortgagee may, if he is entitled to possession as between himself and the mortgagor, take possession by requiring the tenant to pay the rents and profits to the mortgagee or his agent instead of paying them to the mortgagor (c). The mere fact that the mortgagee intercepts the. rents and profits after they have been paid by the tenants to the mortgagor's agent does not take the mortgaged property out of the mortgagor's control. "In order to hold that a mortgagee not in actual possession is in receipt of the rents and profits, in my opinion, it ought to be shown not only that he gets the amount of the rents paid by the tenants, even although he gets their cheques or their cash, but that he receives it in such a way that it can be properly said that he has taken upon himself to intercept the power of the mortgagor to manage his estate, and has himself so managed and received the rents as part of the management of the estate." (d)

(a) As to the right to possession as between mortgagor and mortgagee, see chapter 22, Action for Possession, Sec. 212.

(b) See chapter 15, Lessee of Mortgaged Land, Sec. 141.

(c) Noyes v. Pollock, 1884, 32 Ch.D. 53, at p. 61. See chapter 15, Sec. 142, as to the right to require payment of rent by a tenant under a paramount lease.

If a person, though in fact a mortgagee, enters into possession of the rents and profits in another character, he cannot be charged as a mortgagee in possession. His receipt of the rents and profits in the particular character of mortgagee in possession must be distinctly established. A person who purchases a property from a mortgagee and goes into possession, supposing himself to be the owner, if it afterwards appears that he is not validly clothed with that character, but only holds a lien on the property in virtue of the money advanced by him on the supposed purchase, cannot therefore be so treated as to make him liable to render accounts as an ordinary mortgagee in possession. It is essential to the creation of such liability that he should have known that he was in possession as mortgagee (e).

So, where a mortgagee acted as owner after final order of foreclosure regularly obtained, and the foreclosure was afterwards opened by the court in the exercise of its equitable jurisdiction, it was held that prior to the opening of the foreclosure the mortgagee was not chargeable as a mortgagee in possession-as owner he was under no obligation to repair or keep up buildings or to obtain tenants (f).

(d) Noyes v. Pollock, 1884, 32 Ch.D. 53, at pp. 61, 64. The appointment of a receiver by a mortgagee otherwise than under statutory or express power to appoint a receiver will constitute the mortgagee a mortgagee in possession. See chapter 32, Appointment of Receiver, Sec. 354.

(e) Parkinson v. Hanbury, 1867, L.R. 2 H.L. 1, 18 R. C. 411; cf. Carroll v. Robertson, 1868, 15 Gr. 173 at p. 176; Fawcett v. Burwell, 1880, 27 Gr. 445.

So, if a mortgagee enters into possession as tenant for life or as purchaser of the equity of redemption, or as trustee or agent for the mortgagor, or in any character other than that of mortgagee, he will not be chargeable as mortgagee in possession (g). Generally, however, a mortgagee who enters into possession will be treated as mortgagee in possession, and be chargeable as such, though he calls himself trustee, manager or agent of the mortgagor (h).

A mortgagee will not be liable to account as a mortgagee in possession merely because the mortgage contains an attornment clause (i).

Even if a mortgage is in the form of a conveyance with a trust for sale, the mortgagee in possession is not an express trustee of the property for the mortgagor within the meaning of the equitable rule that time does not run in favour of an express trustee (j).