marshalling of securities

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An application of marshalling of assets. If A mortgages two properties to B and then mortgages one of the properties in addition to C (who may or may not know of B's mortgage) then B, as first mortgagee, may obtain his money from whichever mortgaged property he chooses. However, if he chooses to obtain his money from the property mortgaged to C, C may if necessary obtain his money from the other property. This right cannot be exercised when a purchaser has obtained the property without knowing of the facts giving rise to the right to marshal.

Subjects: Law.

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