Equitable Subrogation in Mortgage Refinancing and Land Purchase Transactions
When a lender makes a mortgage loan to refinance an existing first mortgage, the lender typically expects its refinancing loan to have first priority. If there is an intervening lien on the mortgaged property, however, a priority dispute may result in which the intervening lienholder argues that the recording statutes give it priority over the refinancing lender’s mortgage lien.
In this situation, the principle of equitable subrogation may apply to allow the refinancing lender to be subrogated to the priority of the paid-off mortgage so as to obtain priority over the intervening lien. While the Restatement (Third) of Property: Mortgages (1997) embraced the application of equitable subrogation in this context, not all courts have embraced the Restatement approach.
Our speakers David Reiss, from the Brooklyn Law School, and Wilson Freyermuth, Professor of Law at the University of Missouri School of Law will discuss a series of recent decisions (all decided in the 2015 calendar year) addressing the extent to which equitable subrogation is (or should be) available in the mortgage refinancing and land purchase context.
Professors' Corner is a monthly teleconference featuring law professors discussing recent cases or issues of interest to real estate practitioners and scholars.
The content of this program does not meet the requirements for continuing legal education (CLE) accreditiation. You will not receive CLE credit for this program or any Professors' Corner program.