Q&As

Can a mortgagee redeem a prior ranking mortgage and if so in what circumstances?

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Published on LexisPSL on 29/09/2014

The following Banking & Finance Q&A provides comprehensive and up to date legal information covering:

  • Can a mortgagee redeem a prior ranking mortgage and if so in what circumstances?
  • Does a mortgagee have the right to redeem a prior ranking mortgage?
  • Are there any relevant cases on this point?
  • Are there any other points to note?

Does a mortgagee have the right to redeem a prior ranking mortgage?

This is a fairly complicated area but in short there will be situations in which a second charge holder has the right to redeem a prior ranking charge. There are conditions to this right, including an obligation to foreclose against the mortgagor.

Fisher & Lightwood’s Law of Mortgage (Chapter 47—Redemption) discusses who has the right to redeem a mortgage and  in what circumstances. See in particular the following extract taken from the section in Chapter 47 entitled 'Persons entitled to redeem' (see the further reading links in the Related Documents section for a link to the section).

'A later mortgagee is entitled to redeem, but his right is not, as in the case of the mortgagor and the assignee of the mortgaged property, an absolute right. If the right has to be asserted in a redemption action, the court will require the later mortgagee to redeem not only the prior mortgage, but all mortgages standing between his interest and that of the prior mortgagee (though not mortgages which are themselves prior to the interest of the prior mortgagee, to which the later mortgagee will in any event take subject). The court will also require the mortgagee seeking redemption to foreclose against the mortgagor and all mortgagees ranking after the redeeming mortgagee. The reason is that

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