Real Estate Questions Answered: What is Lien Priority?

Real Estate Agent with Solid Source Realty GA 320764

Q. - What Is Lien Priority and How Does It Effect Me?

A. - To explain this as simply as possible, lien priority is the position of one lien over another, which determines which gets paid first in a payoff, AND it is based on when things get recorded.

Surprised? Many people think that lien priority is based on which loan is the for the largest amount. 

Well, not exactly.

When you buy a home and get a loan for the home, the lender puts a lien on the property.  In this way, the property becomes collateral for the loan. So, in the event the homeowner is unable to make payments, the lender can force the sale of the home to get paid. There can be several liens at one time on a single property.

Except for tax liens which take precedence over any other lien, all other liens are prioritized according to when they were recorded. Every home owner should be aware that non-payment of taxes is one more way they can lose their property to foreclosure.

But, barring a tax lien, whoever records first would be in "Senior" position and any other liens -- as with a second mortgage, a Home Equity Line of Credit used for home improvement, or any judgments against the homeowners -- would be in "Junior" positions according to when they were filed. 



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Re-Blogged By Re-Blogged At
Lending / Financial
Georgia Clayton County
Active Rain Newbies
Atlanta Real Estate Q&A
South Metro Agents
Georgia Association of REALTORS®
Solid Source Realty, Inc.
home equity line of credit
real estate questions and answers
lien priority
senior lien position
junior lien position
tax liens and judgments

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Jeana Cowie
RE/MAX Real Estate Limited - Paramus, NJ
Broker Associate, ABR, CRS, GRI, SRES

I remember learning this from Broker's class. Good reminder and 1 might think the largest amount has priority.

Feb 21, 2010 06:44 AM #1
Charles Stallions Real Estate Services
Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.

So true and so right but usually the larger is the one recorded. I fa person is being foreclosed on I guess this would help right.

Feb 26, 2010 01:08 PM #2
Tony and Suzanne Marriott, Associate Brokers
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

Junior Liens when handled correctly do not need to tank a short sale transaction.  Persistence is key.

Dec 22, 2010 02:49 AM #3
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Elva Branson-Lee

CDPE - Atlanta Real Estate & Short Sale Agent
Ask me about Georgia short sales
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