Escrow & Title
The priority of liens in Indiana is generally determined by:
AThe amount of the lien
BThe order in which liens are recorded — first recorded, first in priority (first in time, first in right)✓ Correct
CThe type of lien (mortgage always first)
DThe lender's election at the time of default
Explanation
Indiana follows the 'first in time, first in right' principle for lien priority. Generally, the lien recorded first has the highest priority.
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Key Terms to Know
Lien
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Right of First RefusalA contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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