Multiple choice

XYZ created equitable mortgage in favour of Bank A on January 14, 2007 (not registered), a simple mortgage with Bank B on January 28, 2007 (and registered on March 12, 2007) and a simple mortgage with Bank C on Februrary 10, 2007 (and registered on Februrary 28, 2007). The priority of mortgage in this case would be in which of the following orders?

  1. Bank C, Bank B and Bank A

  2. Bank B, Bank C and Bank A

  3. Bank B, Bank A and Bank C

  4. Bank A, Bank B and Bank C
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If a property's title has multiple mortgage liens and the loan secured by a first mortgage is paid off, the second mortgage lien will move up in priority and become the new first mortgage lien on the title. Documenting this new priority arrangement will require the release of the mortgage securing the paid-off loan. Thus, the priority will be according to the date. As mortgage in favour of Bank A was on January 14, 2007 and was the earliest, thus, will be dealt first and subsequently Bank B (January 28, 2007) and Bank C (February 10, 2007).

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