Oct 24, 2017
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Doctrine of Marshalling – Property Act

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Section 81 of the Transfer of Property Act, deals with the doctrine of Marshalling of securities.

According to Sec. 81 of the Transfer of Property Act:

If the owner of two or more properties –

i) mortages them to one person,

ii)and then mortages one or more of the properties to another person,

in such a case, the subsequent mortage is entitled to have prior mortage-debt satisfied out of property or properties which are not mortaged to him. This will not affect the right of the prior mortagee who has aquired an interest in any of the properties for consideration. (in the absence of a contract to the contrary).

For eg: Mr ‘A’ mortgages  two of his properties namely; ‘1st’ and ‘2nd’ to Mr ‘B’. Thereafter, Mr.’A’ mortgages property ‘2nd’ to Mr ‘C’.  If the Mr ‘B’ mortgagee prefers to proceed against ‘2nd’ property, then subsequent mortgagee Mr ‘C’ may compel Mr ‘B’ to first proceed against ‘1st’ property to realize his dues. But later, if Mr ‘B’ is unable to realize his dues from ‘1st’ property, then he may proceed towards recovery of dues from ‘2nd’ property.


Article Categories:
Property Law

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