Lien Priority For Real Estate

What is Lien Priority?
Lien priority is the legal order in which liens are paid off when a property is sold (especially in foreclosure). It determines who gets paid first and who might get wiped out if there’s not enough equity.

General Rule of Lien Priority: First in Time, First in Right
1. Property Taxes & Special Assessments (Always #1)

• County and municipal taxes take super-priority.
• These liens must be cleared first in any sale.

2. Mortgage Liens (in order of recording)

• First mortgage (the main lender) is usually next.
• Second mortgage or HELOCs come after.

3. Other Liens (by recording date)

• Mechanic’s Liens (for unpaid work by contractors)
• Judgment Liens (from lawsuits)
• HOA Liens (may vary by state)

4. IRS Liens

• Usually follow state law and often subordinate to earlier liens.
• Exception: Federal liens can have unique rules under certain conditions.

Example: Lien Priority in Action
Imagine a property with these liens:

Lien Type Date Recorded Amount Priority Rank
Property Taxes 2022 $5,000 1 (superior)
First Mortgage 2020 $150,000 2
IRS Lien 2023 $15,000 4
HOA Lien 2021 $3,000 3 (varies by state)

If sold at foreclosure for $160,000:

Taxes get paid first ($5,000)

First mortgage paid next ($150,000)

Remaining $5,000 could go to HOA or IRS, depending on state law.

Any junior lien holders after that (like judgments) may get nothing.

Special Situations
Tax Liens: Always super-priority—even over mortgages.

HOA/Condo Liens: In some states (like Florida and Nevada), they can have priority over a first mortgage up to a certain cap.

Mechanic’s Liens: Sometimes have priority over mortgages if work started before mortgage was recorded.

IRS Liens: Generally subordinate to earlier liens but can have rights in federal tax foreclosures.

Why It Matters

• Know who gets wiped out in a foreclosure.
• Protect your position as a lienholder.
• When buying tax liens or at foreclosure, know if you’ll owe anything else.
• Be careful paying off junior liens—you may not get paid back!