Law of Commerce
what is meant by mortgage equity of redemption foreclosure and power of sales explain the importance of
registration and the priority between first second and third mortgages.
Equity of redemption is a law that is based on the doctrine of equity on the ground that a
mortgage is pledge for securing the payment of the property. According to Sealy and Hooly
(2008), the equity of redemption differs from the right of redemption in that the former has the
LAW OF COMMERCE 2
equity of redemption until the sale and has the right of redemption if it is provided by the
statutes. According to Sealy and Hooly (2008), mortgage foreclosure is the legal process of
forcing the sales of assets used in collateral loan in the circumstances where the lender attempts
to recover the balance of a loan from a property buyer who has refused to clear payments for
such a property. Initially, the lender must obtain the right of redemption before processing with
his debt recovery plans from the mortgage owner. The foreclosure by the power of sales is a
regulation of the mortgage document that empowers the lender to regain the amount due on his
property by selling the property in case where the payments are not met as agreed. The power of
sales is a legal protection to the seller that preauthorizes him to regain his property through
selling it in a way of non-judicial foreclosure.
The importance of registration of a mortgage is that it allows for ascertaining the rightful
owner of the property with the aim of eliminating quacks and property theft in addition of
enabling the property to passed easily without any difficulty of proving the right ownership of
the property. Priorities are given differently between the first, second, and third mortgages
depending on their position to the property. The first mortgage has exclusive priority over other
liens, such that the mortgage that is in the first position has priority over the second and the third
in case of default on monthly payments. The second mortgages is a type of mortgage made while
the first mortgage is still in effect such that the original mortgage will receive be given priority in
the case of monthly default.
Reference
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Sealy.L. S & Hooley, R.J. (2008). Commercial Law: Text, Cases, and Materials. Oxford
University Press; 4th edition
