Doctrines in Mortgage

Some Doctrines Regarding Mortgage.

1. Doctrine of Marshalling   [Section:81 of Transfer of Property Act 1882]
2. Doctrine of Contribution  [Section :82 of Transfer of Property Act 1882]

Doctrine of Marshalling

Marshalling means to arrange. Section 81 of the Transfer of Property Act provides that 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 mortgage 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.

Illustration

Sreza mortgages his two properties X and Y to Rishma and then mortgages Y to Ryan. If Sreza seeks to realize his mortgage out of Y, Ryan can compel Sreza to proceed first against X and realize the debt from it. In case Sreza is unable to realize the whole amount due to him from X, he is entitled to recover the balance from Y.

Doctrine of Contribution.

Section 82 of the Transfer of Property Act deals with the doctrine of contribution. It provides that where property subject to a mortgage belongs to two or more persons having distinct and separate rights of ownership therein, the different shares in or parts of such property owned by such persons are, in the absence of a contract to the contrary, liable to contribute rate-ably to the debt secured by the mortgage, and, for the purpose of determining the rate at which each such share or part shall contribute, the value thereof shall be deemed to be its value at the date of the mortgage after deduction of the amount of any other mortgage or charge to which it may have been subject on that date.

Where, of two properties belonging to the same owner, one is mortgaged to secure one debt and then both are mortgaged to secure another debt, and the former debt is paid out of the former property, each property is, in the absence of a contract to the contrary, liable to contribute rate-ably to the latter debt after deducting the amount of former debt from the value of the property out of which it has been paid.

However, the above provisions are not applicable to a property liable under s 81 to the claim of the subsequent mortgage. Thus it is in effect declared that, where marshalling and contribution might conflict with each other, marshaling is to prevail.

For example, the owner of two properties, X and Y after mortgaging them separately to Syan and Shapnil, mortgages them together to Runie, and then mortgages X to Osama Here Osama is under s 81 entitled to compel Runie to resort to property Y and satisfy his claim out of that security as far as it will go.

What is Transfer of Property?

Liabilities of mortgagee in possession

Rights and liabilities of co-sureties.

Doctrines in Mortgage

Redemption of Mortgages

What is Mortgage?

How collective bargaining evolved in India  Provisions relating to payment of wages and deductions as discussed in the ‘Shops and Establishments Act  When does silence amount to fraud? ============================================================================== This site is mainly dedicated for Students of Law Schools, Law Universities, Students of Higher Education in Law, Admission in Law Schools, Scholars in Law, Students of Bar-at-Law, Law admission information, College of Law, Law Notes, Law Training, Law Tuition,  Law Study Guidelines, Business Law, Students of ACCA, CIMA, CFA,CA,ICWA,CPA, MBA