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    Question

    According to the principle of marshalling by a subsequent purchaser, if an owner mortgages two or more properties to one person and later sells one or more of those properties to another person, the subsequent purchaser___________-

    A Must satisfy the mortgage debt using the property or properties sold to them Correct Answer Incorrect Answer
    B Is entitled to have the mortgage debt satisfied out of the property or properties not sold to them, provided it does not prejudice the rights of the mortgagee or other claimants Correct Answer Incorrect Answer
    C Can demand a reduction in the mortgage debt from the mortgagee Correct Answer Incorrect Answer
    D Is liable to pay the entire mortgage debt irrespective of which properties were sold Correct Answer Incorrect Answer
    E Has no claim or rights related to the mortgage debt Correct Answer Incorrect Answer

    Solution

    Transfer of Property Act: Section 56. Marshalling by subsequent purchaser—If the owner of two or more properties mortgages them to one person and then sells one or more of the properties to another person, the buyer is, in the absence of a contract to the contrary, entitled to have the mortgage -debt satisfied out of the property or properties not sold to him, so far as the same will extend, but not so as to prejudice the rights of the mortgagee or persons claiming under him or any other person who has for consideration acquired an interest in any of the properties.

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