Final answer:
The significance of distinguishing between mortgages lies in the priority of registration, which determines the order in which mortgages are paid off in case of default. Lenders with higher priority have a better chance of recovering their debt.
Step-by-step explanation:
The significance of distinguishing between mortgages registered on a property's title lies in the priority of registration. When a mortgage is registered on a property's title, it creates a legal claim or lien on the property. The priority of registration determines the order in which multiple mortgages are paid off in case of default. Lenders with higher priority have a better chance of recovering their debt.
For example, if there are two mortgages registered on a property with different priority levels, the lender with the higher priority will be paid first from the proceeds of the sale of the property in case of default. The lender with the lower priority will only be paid if there is money left after satisfying the higher priority mortgage.
This impacts the recovery of debt by lenders because if a lender holds a mortgage with a lower priority, they may have a higher risk of not recovering the full amount owed to them if the borrower defaults on the loan.