Tacking mortgages

The word tacking denotes annexing, and as applied to mortgages. It signifies the annexation of a subsequent to some prior charge so as to squeeze out a mesne charge.  This happens when a third of subsequent mortgagee of land, by getting a conveyance to himself of the legal estate of the first mortgagee, is enabled to obtain, for his own security, priority over the second mortgage; or where a first legal mortgagee, by taking a further mortgage for a further advance upon the same property. Defeats the equitable claims of a mesne encumbrance, ie, a person who has lent money on the property after the first but before the further mortgage. The party is then said to tack his mortgage to the first mortgage. This is permitted if the person who claims to tack his originally advanced his money without notice of the encumbrance or encumbrances over which he claims priority, notwithstanding that he might have had notice of the same before getting in the legal estate. For the person so claiming to tack is held to have an equity equal to that of the mesne encumbrance over whom he claims priority; and having got in the legal estate, he obtains priority on the principle that where equities are equal, the law shall prevail; and mere priority of time is not regarded where there is any other ground of difference.

The law of tacking is express in following rules which are principally taken from the celebrated case of Brace v Duches of Marlborough

  1. The third mortgage buying in a first mortgage, being a legal mortgage may annex his third mortgage to the first, so as to squeeze out, i.e., get paid before, the second of mesne mortgage:
  2. One who is a legal mortgage to begin with, and who afterwards advances a further sum upon a judgment, may in like manner annex his judgment to his mortgage; but one who is a judgment-creditor to begin with cannot annex his judgment to the first legal mortgage which he may afterwards obtain a transfer of, soil, so as to squeeze out a mesne mortgage, because otherwise he may (after actually delivery in execution under the judgment) tack the judgment to the mortgage.
  3. Tacking it excluded when all the mortgages are equitable; also where the third mortgage or the subsequent judgment is made or obtained with notice of the second or mesne mortgage.

What is Sub-mortgage

When a mortgagee borrow money upon the security for any part of the security held by himselft to secure the loan made by himself, he effects what is called a sub-mortgage. For example, an equitable mortgagee by deposit may deposit with any third person by way of securing an advance made by the latter to himselft all or any of the title deeds deposited with him by the original mortgagor.

Related Terms : Mortgage
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