Section 79 of the Transfer of Property Act, 1882

Section 79 of the Transfer of Property Act, 1882

Section 79 of the Transfer of Property Act, 1882 deals with the priority of mortgages in case of future advances. It states that if a mortgage is made to secure future advances, the performance of an engagement, or the balance of a running account, and it expresses the maximum amount to be secured by it, then a subsequent mortgage of the same property will be postponed to the prior mortgage in respect of all advances or debits not exceeding the maximum, even if they are made or allowed with the notice of the subsequent mortgage. This section aims to protect the prior mortgagee who has agreed to lend more money to the mortgagor in the future, and to prevent the subsequent mortgagee from claiming priority over the prior mortgagee for the amount exceeding the maximum.

Section 79 deals with the priority of mortgages in case of future advances, when the maximum amount is expressed.

For example, suppose A mortgages his property to B for Rs. 10 lakhs, with a condition that B will lend more money to A in the future, up to a maximum of Rs. 20 lakhs. Later, A mortgages the same property to C for Rs. 15 lakhs, with the notice of the prior mortgage to B. In this case, B will have priority over C, for the amount up to Rs. 20 lakhs, even if he lends more money to A after the subsequent mortgage to C. C will be postponed to B, for the amount not exceeding the maximum.

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