Lien Priority: An Overview
Lien priority determines the order in which creditors are paid following a foreclosure or other legal action. Liens are legal claims against property that provide security for a debt or obligation. If the lien is not paid, the lien holder (person you owe the debt or obligation to) can go to court and ask that the property be sold to pay the lien. This is called foreclosing on the lien. The lien attaches to the property and stays with it, even if the property is sold to someone with no knowledge of the lien.
Determining Lien Priority
The priority of liens is generally determined by the “first in time, first in right” rule. This means that the lien that is recorded first in the land records has higher priority than later recorded liens. However, there are some exceptions to this rule. Certain liens, such as property tax liens, special assessment taxes, some HOA and COA assessment liens (called “super liens”), and mechanic’s liens, can have priority over previously recorded liens depending on state law.
Priority of Common Lien Types
Mortgage Liens: First mortgages have priority over most subsequently-recorded liens and get paid first out of foreclosure sale proceeds.
Key Facts
- Priority of Liens: Liens generally follow the “first in time, first in right” rule, meaning that the lien recorded first in the land records has higher priority than later recorded liens.
- Exceptions to Priority: Certain liens, such as property tax liens, special assessment taxes, some HOA and COA assessment liens (called “super liens”), and mechanic’s liens, can have priority over previously recorded liens depending on state law.
- Mortgage Liens: First mortgages have priority over most subsequently-recorded liens and get paid first out of foreclosure sale proceeds.
- Judgment Liens: Judgment liens, which are filed when someone loses a court case and owes money, are often lower in priority compared to other liens like mortgages.
- HOA and COA Liens: Homeowners’ association (HOA) and condominium owners’ association (COA) liens are often junior to first-mortgage liens, but some states have provisions for “super liens” that give these liens higher priority.
- Mechanic’s Liens: Mechanic’s liens, filed by unpaid contractors or material providers, can sometimes have priority over other previously recorded liens[3].
Judgment Liens: Judgment liens, which are filed when someone loses a court case and owes money, are often lower in priority compared to other liens like mortgages.
HOA and COA Liens: Homeowners’ association (HOA) and condominium owners’ association (COA) liens are often junior to first-mortgage liens, but some states have provisions for “super liens” that give these liens higher priority.
Mechanic’s Liens: Mechanic’s liens, filed by unpaid contractors or material providers, can sometimes have priority over other previously recorded liens.
Conclusion
Lien priority is a complex area of law that can have a significant impact on the outcome of a foreclosure or other legal action. If you have any questions about lien priority, it is important to consult with an attorney.
Sources
FAQs
What type of lien takes priority over all other liens?
**Answer:** In some states, certain liens, such as property tax liens, special assessment taxes, some HOA and COA assessment liens (called “super liens”), and mechanic’s liens, can have priority over all other liens.
What is a “super lien”?
**Answer:** A “super lien” is a lien that is given a higher priority than other types of liens by state statute.
Do all states have super liens?
**Answer:** No, not all states have super liens.
What is the priority of a mortgage lien?
**Answer:** A first mortgage lien typically has priority over all other liens except for super liens.
What is the priority of a judgment lien?
**Answer:** A judgment lien is typically lower in priority than other liens, such as mortgages and super liens.
What is the priority of a mechanic’s lien?
**Answer:** The priority of a mechanic’s lien varies by state, but it can sometimes have priority over other previously recorded liens.
What should I do if I have questions about lien priority?
**Answer:** If you have any questions about lien priority, it is important to consult with an attorney.