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Two properties are mortgaged to a lender, and the owner later mortgages one of them to another lender.…

The subsequent mortgagee may have the prior mortgage debt satisfied from the property that secures only the prior mortgage, so far as that property will extend. Section 81…

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Two properties are mortgaged to a lender, and the owner later mortgages one of them to another lender. Who may invoke the right of marshalling under section 81 of the Transfer of Property Act, 1882?

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Answer and explanation

Correct answer C

The subsequent mortgagee may have the prior mortgage debt satisfied from the property that secures only the prior mortgage, so far as that property will extend. Section 81 respects any contrary contract and protects the prior mortgagee and anyone who acquired an interest in either property for consideration.

Option feedback

Option A

Section 81 protects the prior mortgagee from prejudice and gives the right to the subsequent mortgagee.

Option B

The mortgagor is the owner who gave the successive mortgages.

Option C

The subsequent mortgagee has the qualified marshalling right.

Option D

An unsecured creditor does not hold the subsequent mortgage required by section 81.

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