Transfer of Property Act Section 56 — Marshalling by subsequent purchaser

CHAPTER III OF SALES OF IMMOVEABLE PROPERTY

General

Summary

If a person owns multiple properties and mortgages them all to one lender, then later sells one of those properties to a buyer, that buyer has the right to insist that the mortgage debt be paid first from the properties that were not sold to them, as long as those other properties are enough to cover the debt. This right applies only if there is no agreement saying otherwise. However, this right cannot harm the lender’s ability to recover the debt, nor can it affect the rights of anyone else who has paid money to acquire an interest in any of the properties.

Official Text

If the owner of two or more properties mortgages them to one person and then sells one or more of the properties to another person, the buyer is, in the absence of a contract to the contrary, entitled to have the mortgage-debt satisfied out of the property or properties not sold to him, so far as the same will extend, but not so as to prejudice the rights of the mortgagee or persons claiming under him or any other person who has for consideration acquired an interest in any of the properties.]