Escrow & Title
Priority of liens on a property is generally determined by:
AThe amount of the lien
BThe order in which liens were recorded✓ Correct
CThe type of lien (mortgage, tax, mechanic's)
DThe lender's preference
Explanation
Lien priority is typically determined by the order of recording — 'first in time, first in right.' Exceptions include property tax liens, which often have super-priority regardless of recording date.
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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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