Section 152 — Property Law Act 2007: Application of income received by mortgagee in possession

152 Application of income received by mortgagee in possession (1) A mortgagee in possession of mortgaged land, goods, or accounts receivable must apply all income from the land, goods, or accounts receivable received as mortgagee in possession as follows: (a) first, to the payment of all amounts (if any) referred to in subsection (2), together with interest on those amounts at the agreed rate (if any) at which interest is payable on the principal amount secured by the mortgage: (b) secondly, to the payment of amounts secured by any other mortgage, encumbrance, or security interest over the property to the extent that it has priority over the mortgagee’s mortgage and so far as payment is then due: (c) thirdly, to the repayment of all amounts (if any) paid or advanced by the mortgagee for the purpose referred to in paragraph (b), together with interest on those amounts at the agreed rate (if any) at which interest is payable on the principal amount secured by the mortgage: (d) fourthly, to the payment of amounts secured by the mortgage so far as payment is then due (and to the extent that those amounts have not been paid under paragraphs (a) to (c)): (e) fifthly, to the payment of amounts secured by any subsequent mortgage, subsequent encumbrance, or subsequent security interest over the property so far as payment is then due if— (i) the subsequent mortgage, subsequent encumbrance, or subsequent security interest is registered; or (ii) the subsequent mortgage, subsequent encumbrance, or subsequent security interest is unregistered, but the mortgagee has actual notice of it: (f) sixthly, to the payment of any surplus to the current mortgagor. (2) The amounts are amounts reasonably paid or advanced at any time by the mortgagee— (a) for the protection, insurance, maintenance, preservation, or repair of the mortgaged land, goods, or accounts receivable; or (b) for the payment of rates or other outgoings; or (c) to meet the expenses of the mortgagee in entering into possession, or in doing anything that a mortgagee in possession is required or entitled to do; or (d) with a view to the realisation of the security (including any additional amount referred to in section 120(2) or 129(2) ); or (e) to meet the expenses of carrying on a business that the mortgagee is entitled to carry on as a mortgagee in possession (for example, to pay for inventory). (3) For the purposes of— (a) subsection (1)(b), if there is more than 1 mortgage, encumbrance, or security interest referred to in that paragraph, payment must be made under that paragraph of amounts secured by each in the order of its priority: (b) subsection (1)(e), if there is more than 1 mortgage, encumbrance, or security interest referred to in that paragraph, payment must be made under that paragraph of amounts secured by each in the order of its priority. (4) Subsection (1) is subject to section 153 . (5) This section and section 153 — (a) apply to income received as mortgagee in possession that is applied on or after 1 January 2008; but (b) do not apply if section 104PPA of the Property Law Act 1952 continues to apply under section 154 .