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How Do I Loan Money and Makes Sure My Lien Comes First?

How Do I Loan Money and Makes Sure My Lien Comes First?

Q: What document creates a lien?

A lien is typically created by a legal document known as a mortgage or a deed of trust. These documents outline the terms of the loan and grant the lender a security interest in the property. Additionally, other documents, like judgment liens, can be filed to establish a lien based on court decisions.

Q: What is a first priority lien?

A first priority lien is the highest-ranking lien on a property, meaning it must be paid off first in the event of a sale or foreclosure. This priority is usually determined by the order in which liens are recorded. The holder of a first priority lien has the right to collect from the property's value before any junior liens.

Q: What is the first lien priority?

First lien priority refers to the order of claims against a property. The first lien recorded generally has priority over subsequent liens. This means that in a foreclosure or sale, the first lienholder is paid first from the proceeds, ensuring they recover their investment before any other creditors.

Full question:

I need the correct form or document in order to have the first position on a property lien from a loan to purchase the property.

Category: Real Property
Subcategory: Liens
Date: 04/07/2025
State: California

Answer:

Priority of liens is generally determined by the date of recording. Often, the the mortgage holder will have priority over any later filed liens (junior creditors), and the liens junior creditors hold will only be able to be collected out of any remaining proceeds after the mortgage holder is paid. If the property securing the mortgage is sold in foreclosure and no proceeds remain to pay junior creditors, it is possible the junior creditors could attach other assets of a judgment debtor.

A subordination agreement is a legal document by which a person who holds an otherwise senior interest agrees to subordinate that interest to a normally lesser interest. This usually happens when a seller agrees to subordinate a purchase-money mortgage so that the buyer can obtain a first-mortgage loan to improve the property.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What is the first lien on a property?

The first lien on a property is the primary claim against the property that has the highest priority for repayment in the event of a sale or foreclosure. This lien is typically established by the first mortgage recorded on the property. It ensures that the lender is paid first before any other creditors or lienholders can collect from the proceeds of the sale.