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An owner mortgages two properties to one lender and later mortgages just one of them to another lender.…

Section 81 gives this marshalling right absent a contract to the contrary. It operates only as far as the other property can satisfy the earlier debt and without prejudice…

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An owner mortgages two properties to one lender and later mortgages just one of them to another lender. Subject to section 81 of the Transfer of Property Act, 1882, the later mortgagee can require the earlier debt to be paid first from the property outside the later mortgage, as far as it will extend. What is this rule called?

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Answer and explanation

Correct answer C

Section 81 gives this marshalling right absent a contract to the contrary.

It operates only as far as the other property can satisfy the earlier debt and without prejudice to the protected prior mortgagee or other persons who have acquired interests for consideration.

Option feedback

Option A

Subrogation substitutes qualifying parties into the position of a redeemed mortgagee.

Option B

Contribution concerns apportioning a common mortgage burden.

Option C

Marshalling requires the earlier mortgage to draw first on security outside the later mortgage, subject to statutory limits.

Option D

Tacking concerns gaining priority through another advance or interest, a different issue governed by section 93.

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