Limitation of Actions Consultation - Law Commission

6.50 Where a lender holds a second mortgage over a property, and it is no longer able
to enforce its rights because the limitation period has expired, its rights will be
barred, not only against the mortgagor, but also against the first mortgagee. 127
So,
the statute-barred second mortgagee will lose the right to redeem the first
mortgage. 128
If the first mortgagee exercises the power of sale, the second
mortgagee has no right to receive any of the proceeds of sale under section 105 of
the Law of Property Act 1925. 129
127 The same applies, mutatis mutandis, to third and subsequent mortgagees, with regard to
prior mortgages. See, eg, Young v Clarey [1948] Ch 191.
128 Cotterell v Price [1960] 1 WLR 1097.
129 Young v Clarey [1948] Ch 191.
109