A lessee of land who pays rent which is less than the full annual value of the land has a valuable estate in the land, and he can borrow money by mortgage of his interest.

A mortgage of leaseholds is usually made by a suit-lease and not by assignment.

The reason of this is that (as we have seen on p. 202) an assignee of a lease is hound to perform the covenants in the lease; if therefore the mortgagor were to assign the whole of his term to the mortgagee, the mortgagee would he hound to perform the covenants in the lease.

The mortgagor therefore usually sub-lets the whole of his term except the last few days.

The mortgagee is then only a sub-lessee, and is not liable on the covenants to the original lessor.

The mortgagor usually declares himself to be a trustee of the last few days of the term for the mortgagee.

In either case the mortgage will contain a proviso that the mortgagee shall re-assign his term to the mortgagor if the money lent is repaid within 6 months with interest.

The student should read the form of a mortgage of leaseholds on p. 329.