- August 27, 1990
- All Oregon Offices
- Equitable Subrogation
The Court of Appeals has ruled that the doctrine of equitable subrogation can entitle a new mortgagee whose loan discharges a senior lien to priority over an intervening lien of record of which the mortgagee was not aware. Rusher v. Bunker, 99 Or. App 303, 782 P.2d 170 (1989).
In this case the land was encumbered of record by two liens. However, a title report to a new lender missed the second lien. The new loan was made and the proceeds were used to pay off the first lien. The new mortgagee succeeded to the priority of the first lien that it paid off. It did not matter that the second lien was recorded.
This concept of equitable subrogation depends "on the facts of the case and on the relative equities favoring the parties." It is not a mechanical rule but is something that you should be aware of.
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