Leon v Kensington Mortgage Company Ltd & Anor (2023) and the concept of subrogation

United Kingdom

This briefing considers the concepts of "subrogation" and "bona vacantia" which were discussed in the recent case of Leon v Kensington Mortgage Company Ltd & Anor [2023] EWHC 121 (Ch). Where a surety or guarantor has to make a payment of the liabilities it has guaranteed to a third party, it will look to the principal debtor to reimburse it for that payment and to assist with this, the surety will have a right to be subrogated in relation to any security also held by the beneficiary of the guarantee. The beneficiary will want to ensure that these rights of subrogation only apply once they have been repaid in full.

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