Freeing Mortgages of Merger

Change in real property law often occurs with glacial speed.This rate of change in part reflects the normal inertia of established law. A more complete explanation, however, is the innate conservatism connected to a commodity that once was the primary source of wealth and power. That this conservatism is innate should not prevent application of Ockham's razor as needed. The relationship of the doctrine of merger to the burgeoning law of mortgages is one such area.

"If the law has to bear these medieval shackles the time surely has come to examine them carefully. They may have rusted away." The modern doctrine of merger is easily stated: When a person holds two estates in property in the same right and without an intervening estate, the two estates will coalesce to one estate unless a beneficial reason exists for keeping them distinct. For example,a life tenant who acquires the reversion immediately following his life estate usually will be deemed to own the fee simple title rather than a separate life estate and reversion. Similarly, a tenant for years who acquires the landlord's interest in the leased property usually will be deemed to own the fee simple title.

The doctrine of merger operates in these cases as a technical, nonsubstantive rule concerning property titles. If the holder of the interests is not benefited in any way by keeping the estates distinct, they will merge to simplify the state of title. Although the application of merger to separate estates in land is generally straightforward, the application of the doctrine to lesser property rights is far from clear. Indeed, with respect to questions involving title to property and a mortgage encumbering that property, merger has been described as "one of the most complex and confusing areas of the law of mortgages." Examination of the historical developments of merger and of mortgages reveals why their union has created theoretical and practical problems: the modern mortgage does not create an interest in land to which merger should apply.' Furthermore, modern title and finance practices have obviated the need for merger.