Also known as: puisne mortgages · junior mortgage · subordinate mortgage
Written by attorneys · grounded in primary & secondary sources — see below
A mortgage subordinate in lien priority to another mortgage on the same property.
Pacific Bank holds a recorded senior mortgage on an office building owned by Harbor Tower LLC. Pulse Media later obtains a junior mortgage that assigns rents and authorizes a receiver on default. Harbor Tower defaults on both loans. Pacific Bank moves for appointment of a receiver. The court grants Pacific Bank's request priority over Pulse Media's competing petition.
Patriot Insurance holds a senior mortgage on a commercial property owned by Pinnacle Holdings. Pulse Media holds a junior mortgage that authorizes a receiver. Pinnacle Holdings defaults. Pulse Media obtains appointment of a receiver that collects rents. The receiver first pays taxes and maintenance expenses before applying the balance to the junior obligation.
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A senior mortgagee's request for a receiver has priority over a junior mortgagee's request unless the senior mortgage lacks both a rents assignment and receiver authorization while the junior mortgage contains at least one of those provisions.
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The junior receiver may collect rents until a senior receiver is appointed. The junior receiver must first apply collected rents to taxes and reasonable maintenance expenses before applying any balance to the junior obligation.
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No. A junior mortgagee can obtain priority for receivership when the senior mortgage contains neither a rents assignment nor receiver authorization and the junior mortgage supplies at least one of those protections.
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