Sec. 141. Distinction between leases before and after mortgage. p. 249.

Sec. 142. Lease by owner prior to mortgage, p. 250.

Sec. 143. Lease by mortgagor subsequent to mortgage, p. 254.

Sec. 144. Statutory or contractual power to lease, p. 257.

Sec. 141. Distinction between leases before and after mortgage

If the owner of land free from encumbrance grants a lease thereof, and afterwards mortgages it, the mortgage affects merely the reversion retained by the mortgagor. The right of the lessee to possession in such case is paramount and the rights of the mortgagee to possession or to have recourse to the land for recovery of the mortgage money are subject to the right of the lessee. A legal mortgagee: becomes, however, the owner of the reversion subject to the mortgagor's right to redeem and when the mortgagee becomes entitled to possession as against the mortgagor he may compel the tenant to pay rent to him instead of the mortgagor (a).

On the other hand, if the owner of land mortgages it and thereafter, without the authority of the mortgagee, purports to grant a lease of it, the lease is a partial transfer of the equity of redemption merely. The mortgagee's rights arc paramount and the tenant's right to possession is subject to the mortgagee's rights to take possession and to have recourse to the land for recovery of the mortgage money. There is no direct relation between the mortgagee and the tenant in such case, as there is in the case of a mortgage being made when the land has already been leased, and unless there is in effect a new tenancy agreed upon between the mortgagee and the tenant, the former is not entitled to compel the latter to pay rent to him. The mortgagee's remedy, if he is entitled to possession, is to eject the tenant (b).

(a) See Sec. 142, infra. It is assumed in this chapter that the mortgagee takes the mortgage with notice of the prior lease, either by virtue of the registration of the lease or otherwise, or that the lease is one which does not require to be registered and the lessee is in possession. See chapter 8, The Registry Act, Sec. 72, and chapter 10, The Land Titles Acts, Sec. 94.