How Do I Loan Money and Makes Sure My Lien Comes First?
Full Question:
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.