3 December 2020

Practice Guide for Second Mortgages – Addressing Deeds of Priority

Nadia Sabaini
Nadia Sabaini Commercial Lawyer

The third publication in our Practice Guide for Second Mortgages addressing Deeds of Priority is now available to download.

Our experience is that often lenders do not know when deeds of priority are required. Most lenders assume that a deed of priority will be required by a first mortgagee or that they should require one if acting as first mortgagee, but as we have seen in our last publication, there are a number of jurisdictions in which a first mortgagee cannot force a second mortgagee to enter into a deed of priority.

Secondly, we find that a number of lenders, and sometimes legal practitioners, do not appreciate what a deed of priority can do, and this often results in a document that does nothing more than re-state the position at law.

In both these situations, the borrower is often paying the cost of a step which is unnecessary or worthless. In order to maximise their value proposition for customers and correctly price their loans, lenders should understand when a deed of priority should be used and how it should be used to provide value to their security and maximise the exercise of two mortgagees engaging with one another.

This is the third of our publications in the Practice Guide for Second Mortgages series. In this series, we are answering some frequently asked questions regarding second mortgages. This publication and our overall guide are designed to give lenders a more in-depth knowledge of second mortgages and some tips and traps to watch out for.

Some of the comments in this publication also apply to a first mortgage and of course, apply to third and other subsequent securities for lenders with that risk appetite.

This publication, prepared by Banking and Finance Director, Nadia Sabaini, covers basic information relating to when a Deed of Priority is required and what it should cover, in order to be a purposeful addition to a second mortgage transaction.

To download your copy, click on the link below and scroll to the bottom of the page.

 


* The information contained in this guide is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Download our eBook – Deeds of Priority

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