Secured creditors hold a powerful position in enforcement, but priority is not self-executing. To realise the benefit of a mortgage, the creditor must assert its preferential right correctly and on time within the enforcement proceedings.
Filing the preferential claim
When mortgaged property is sold at a court auction, the mortgagee must petition to receive payment from the proceeds in priority to ordinary creditors. The petition should establish the validity of the mortgage, the amount secured, and the creditor’s standing, supported by the registered documents.
Partition of proceeds
Once admitted, the secured claim is satisfied from the sale proceeds ahead of unsecured claims, with any surplus distributed to other creditors. Acting promptly and with complete documentation is essential — a late or defective petition can subordinate an otherwise strong security.