Priority generally follows recording order under the applicable recording act. Purchase money mortgages, subordination agreements, and statutory liens may alter the ordinary sequence.
Modification of a senior loan may affect priority.
Alternative Names:
Lien Priority|Mortgage Lien Priority
Why it Matters?
Material modification of a senior mortgage without junior lienholder consent can subordinate the increased portion, which catches lenders that advanced additional funds or extended terms without a subordination agreement. Future advance clauses address that where properly drafted and recorded. Mechanic's liens also relate back to commencement of work in many states, giving them priority over mortgages recorded afterward.
Frequently Confused with
Related terms
Frequently asked questions
Can modification affect priority?
How do mechanic's liens interact?
