Home >> Dictionary Of Banking >> Paying Banker to Transfer Of Shares >> Tacking

Tacking

charge, legal, mortgage, notice and robinson

TACKING. Where there are several mort gages, and one of them a legal mortgage, upon the same piece of land, the legal mort gage may in certain cases be tacked to one of the equitable charges. For example, if Brown grants a legal mortgage to Jones, and subsequently borrows more money upon the same property from Smith and gives him a second charge (i.e. an equitable mortgage) upon the land, and then obtains from Robinson a still further advance upon a third charge, Robinson may, if he did not know about the charge to Smith at the time he lent Brown the money, purchase the legal estate from Jones and tack his third charge to the legal mortgage of Jones and thus squeeze out Smith. The amount that Robinson had lent, added to what Jones had lent, would thus rank as a charge upon the land in front of Smith's charge. If Robinson learned after he had lent the money, about Smith's equitable mortgage, it would not affect his right to tack. If Robinson knew, at the time he lent the money, that Smith held a charge, that knowledge would prevent him " tacking." If Smith gave notice to Jones that he held a second charge, that would not prevent Robinson from tacking his third to the first.

Another example of tacldng is where the legal mortgagee makes a further advance, subsequent to an equitable charge and without any notice of that charge, and adds the amount of the further advance to the original advance. If, however, the legal mortgagee had notice of the equitable charge, at the time he lent the second amount, he could not tack. Where Jones holds a legal mortgage and there are also, on the same property, charges to Smith and Robinson, Jones may, if he likes, purchase the equitable charge of Robinson and tack or add it to his own legal mortgage, provided that lie, Jones, had no knowledge of the charge to Smith at the time of purchasing Robinson's charge.

It is clear, therefore, that a second mortgagee should not neglect to give notice of his charge to the first mortgagee. Such notice will prevent the first mortgagee from lending further upon the property, or from purchasing a third mortgagee's charge, and tacking the amount to his first charge. But the notice would be of no avail in the event of the first mortgage being trans ferred to a party without any notice of the second mortgage. B. Campion, in his lecture " Bankers' Advances upon Title Deeds," said that the second mortgagee should not only give the first mortgagee written notice of his charge, but should further try and persuade him to allow the legal mort gage and the chief title deeds to be indorsed with a note of the second charge. Failing that, he should ask the first mortgagee to attach the written notice to the bundle of deeds. Any subsequent holder of the legal estate would thus be fixed with notice of the second charge.

Tacking was abolished in Yorkshire, as from January 1, 1885. Charges on land in that county take priority according to the date of the registration, and a legal mortgage, unregistered, may be postponed to an equitable charge which is registered. (See