Also known as: junior mortgagees · subordinate mortgagee
Written by attorneys · grounded in primary & secondary sources — see below
A mortgagee whose lien on real property is subordinate in priority to that of another mortgagee on the same property. The junior mortgagee may obtain a receiver to collect rents when its mortgage contains an assignment of rents or receivership authorization even if the senior mortgage lacks both.
Justin Jarvis owns an office building financed by a senior mortgage to Jennings Forge that omits any rents clause or receivership authorization. Jonathan Jaffe later takes a junior mortgage that assigns rents and authorizes a receiver on default. After Jarvis defaults both lenders petition for a receiver. The court appoints the receiver at Jaffe's request because only the junior mortgage supplies the required contractual support.
Joanna Jung holds the senior mortgage on a retail center and Jamal Jefferson holds the junior mortgage. Both mortgages contain rents assignments. The lenders agree to a single receivership that will apply collected rents first to taxes and maintenance. The court enforces their agreement rather than applying strict priority rules.
Select any source to read its text and confirm it supports the definition.
Jose Jimenez as junior mortgagee obtains a receiver who collects $40,000 in rents after paying taxes and repairs. Jennifer Jackson as senior mortgagee later secures her own receiver. The junior receiver retains the net rents for Jimenez because they were collected before the senior receiver took possession.
Jaffe Securities holds a senior mortgage containing a rents assignment while Jiang Textiles holds a junior mortgage with the same provision. Both qualify for receivership. The court orders the receivership to operate for Jaffe Securities' benefit even though the junior mortgage also contains protective language.
Jones Petroleum as junior mortgagee obtains a receiver who collects net rents after taxes and repairs. The senior mortgagee later obtains its own receiver. The junior receiver keeps the collected funds for Jones Petroleum because the senior receiver was appointed after the rents had already been gathered.
A junior mortgagee obtains priority when the senior mortgage contains neither a rents assignment nor receivership authorization and the junior mortgage contains at least one of those provisions. The rule applies even if a receiver was previously appointed at the junior's request.
Supporting sources
The junior receiver may collect rents and apply them first to taxes and reasonable maintenance expenses. Any excess may be applied to the junior obligation. The junior receiver must account to the senior receiver for uncollected accrued rents and unauthorized prepayments.
Supporting sources
Yes. When multiple mortgagees agree on a single receivership and the allocation of rental income the agreement controls. Absent such consensus the court applies the priority rules based on the presence or absence of rents and receivership provisions in each mortgage.
Supporting sources