Mortgages—multiple fixed charges and insufficient equity
Produced in partnership with Peter Levaggi of Charles Russell Speechlys LLP
Mortgages—multiple fixed charges and insufficient equity

The following Restructuring & Insolvency practice note Produced in partnership with Peter Levaggi of Charles Russell Speechlys LLP provides comprehensive and up to date legal information covering:

  • Mortgages—multiple fixed charges and insufficient equity
  • Priority of mortgages over registered land
  • Tacking
  • Remedies available where there are multiple mortgagees/fixed chargeholders
  • Marshalling
  • Simple action to repay
  • Marshalling post formal insolvency
  • Possession
  • Power of sale
  • Appointing a receiver

In this Practice Note, ‘borrower’ and ‘mortgagor’ are used interchangeably, as are ‘lender’ and ‘mortgagee’. This Practice Note also applies to fixed charges (although does not deal with the marginal practical distinction between a fixed charge and a mortgage—for further reading, see Practice Note: Mortgages contained within the Lexis®PSL Banking & Finance module (with subscription)).

Priority of mortgages over registered land

Where a number of loans have been secured over the same property by different mortgages, each mortgagee is entitled to be paid from the proceeds of sale according to the order of priority of the mortgages. The basic rule is that any two charges rank in the order of their creation (Millet J in Macmillan Inc v Bishopsgate Investment Trust plc (No 3)). However:

  1. section 51 of the Land Registration Act 2002 (LRA 2002) requires a mortgage over registered land to be registered to take effect as a legal mortgage

  2. LRA 2002, s 48 provides that mortgages rank in accordance with their order of registration—this means the order shown in the charges register for the property and not the date order in which the mortgages were created (subject to any entry in the register to the contrary) (see rule 101 of the Land Registration Rules 2003, SI 2003/1417 (LRR 2003))

  3. LRA 2002, s 49 limits the priority of the first registered mortgage to advances made

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