Just as the mortgagor is protected by equity, the law provides robust recovery mechanisms for the lender (mortgagee).
1. Right to Foreclosure or Sale (Section 67)
The mortgagee has a right to obtain from the court a decree that the mortgagor shall be absolutely debarred of their right to redeem the property (Foreclosure), or that the property be sold to recover the debt.
- Limitation: Foreclosure is only available in a Mortgage by Conditional Sale and an Anomalous Mortgage. It is strictly barred in Simple and Usufructuary mortgages.
2. Marshalling & Contribution (Sections 81 & 82)
- Marshalling (Section 81): If an owner of two properties mortgages them both to A, and then mortgages one of them to B, B can compel A to satisfy their debt out of the property not mortgaged to B first, to protect B's security interest.
- Contribution (Section 82): Where several properties are mortgaged to secure one debt, each property must contribute ratably to the debt based on its value at the date of the mortgage.
3. Doctrine of Subrogation (Section 92)
Subrogation means "substitution." When any person other than the mortgagor (e.g., a co-mortgagor, subsequent mortgagee, or surety) redeems the mortgaged property, they succeed to all the rights, priorities, and remedies of the original mortgagee against the mortgagor.
💡 Judicial Maxim: "Redeem Up, Foreclose Down"
A puisne (subsequent) mortgagee has the right to redeem the prior mortgage above them, and then foreclose the interest of all subsequent mortgagees and the mortgagor below them to secure their clean title.
A puisne (subsequent) mortgagee has the right to redeem the prior mortgage above them, and then foreclose the interest of all subsequent mortgagees and the mortgagor below them to secure their clean title.