Does a Court Judgment Take Priority Over a Line of Credit?
Full Question:
Answer:
Priority of liens is generally determined by the date of recording. Often, the lender 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.
The answer will depend on the nature of the court judgment and the date of the court judgment's and line of credit's or previous mortgage's filing in the county recorder's office. If the judgment is for property taxes or other money owed to the government, it may take priority even if filed after the lender's lien. You may call the land recorder's office in the county where the property is located to inquire about filing dates.
Please see the following MD statutes:
§ 7-102 REAL PROP. Lien limited to secured amount of mortgage or
deed of trust; priority of future advances.
(a) Necessity for recitation of secured amount. — (1) No mortgage
or deed of trust may be a lien or charge on any property for any
principal sum of money in excess of the aggregate principal sum appearing
on the face of the mortgage or deed of trust and expressed to be secured
by it, without regard to whether or when advanced or readvanced.
(2) Paragraph (1) of this subsection does not apply to a mortgage or
deed of trust to:
(i) Guarantee the party secured against loss from being an
obligee of a third party;
(ii) Indemnify the party secured against loss from being an
endorser, guarantor, or surety; or
(iii) Secure a guarantee or indemnity agreement.
(b) Priority of future advances. — If after the date of the
mortgage or deed of trust, any sum of money is advanced or readvanced,
any endorsement or guaranty is made, or the liability under an indemnity
agreement arises, priority for such sum of money or for any indemnity
arising under the endorsement, or guaranty, or indemnity agreement dates
from the date of the mortgage or deed of trust as against the rights of
intervening purchasers, mortgagees, trustees under deeds of trust, or
lien creditors, regardless of whether the advance, readvance,
endorsement, or guaranty was obligatory or voluntary under the terms of
the mortgage or deed of trust.
§ 14-805 TAX-PROP. Attachment, priority of liens on real and
personal property for taxes due.
(a) Real property. — From the date property tax on
real property is due, liability for the tax and a 1st lien
attaches to the real property in the amount of the property
tax due on the real property.
(b) Personal property. — From the date property tax
on personal property is due, liability for the tax and a 1st
lien attaches to the personal property in the amount of the
property tax due on the personal property.
