Transfer of Property Act Section 81 — Marshalling securities

CHAPTER IV OF MORTGAGES OF IMMOVEABLE PROPERTY AND CHARGES — Marshalling and Contribution

General

Summary

If a person mortgages two or more properties to one lender, and later mortgages one or some of those same properties to a different lender, the second lender has the right to demand that the first lender’s debt be paid first from the properties that were not given to the second lender, as long as those other properties are enough to cover the debt. This right applies only if there is no agreement saying otherwise, and it cannot harm the first lender’s rights or the rights of anyone else who has legally bought an interest in any of the properties.

Official Text

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