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CS Professional · Banking and Insurance - Laws and Practice · Advances, Securities and Documentation

Under Section 81 of the Transfer of Property Act, 1882, which circumstance would defeat a subsequent mortgagee's claim to marshalling?

A contract to the contrary defeats marshalling. Section 81 grants the subsequent mortgagee the right only in the absence of a contrary agreement, whereas a later date, multiple properties or a charge on one property are the very conditions for the right.

  1. AThe two mortgagees contracted that marshalling would not applyCorrect
  2. BThe subsequent mortgage was executed later in time
  3. CThe prior mortgage covers more than one property
  4. DThe subsequent mortgagee holds a charge on only one of the properties

Explanation

Section 81 applies in the absence of a contract to the contrary, so a contrary agreement excludes marshalling. Later execution, multiple properties in the prior mortgage and a charge on only one property are exactly the situation in which marshalling arises.

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