​KembaraXtra – Legal Terms – Marshalling of Securities


Marshalling of securities is a specialized application of the equitable doctrine of marshalling of assets.


The doctrine commonly arises where one creditor holds security over two properties while another creditor has security over only one of them. The first creditor may choose which property to enforce against, but equity protects the second creditor from unfair prejudice.


If the first creditor satisfies the debt from the shared property, the second creditor may claim against the other property so far as necessary to recover the outstanding amount.


This equitable right is limited where it would prejudice an innocent purchaser who acquired property without notice of the circumstances creating the marshalling right.