Which mortgage type is the first to be paid off in the case of property foreclosure?

In the event of property foreclosure, the legal mortgage is prioritized for repayment. This is because a legal mortgage typically holds a first lien position on the property, giving it priority over other claims against the property, including second mortgages and other debts. When a foreclosure occurs, the proceeds from the sale of the property are first directed toward satisfying the most senior liens, which in most cases is the legal mortgage.

This hierarchy of repayment is a critical aspect of mortgage law, ensuring that lenders who have a legal claim are compensated before any subsequent or subordinate interests. As a result, the legal mortgage's standing as the first to be settled in foreclosure scenarios is crucial for lenders, who depend on this structure for the security and predictability of their investments.

In this context, other types of mortgages, such as chattel or equitable mortgages, do not have the same priority. A second mortgage, being subordinate to a first mortgage, is only repaid after the primary mortgage has been satisfied. Understanding these roles and priorities helps clarify the dynamics in foreclosure situations.