What determines payment order for liens in foreclosure?

What determines payment order for liens in foreclosure?

• A. Liens are paid in order of priority from the sale proceeds, with senior liens paid first.
• B. Liens are paid randomly.
• C. Only the mortgage lien is paid.
• D. All liens are paid pro rata regardless of priority.

Answer: (A)

In foreclosure, the distribution of sale proceeds follows lien priority. The money from the sale is applied starting with the highest-priority liens and then moving down to lower-priority ones. This means senior liens—often including property taxes or special assessments by law, then the first mortgage—are paid first from the proceeds. Only after all senior liens are fully satisfied are junior liens paid, and if the sale proceeds aren’t enough, the remaining liens may receive nothing. This priority-based system is why the order matters: you don’t get paid out of order, and a lower-priority lien can be wiped out if funds aren’t sufficient.

In foreclosure, the distribution of sale proceeds follows lien priority. The money from the sale is applied starting with the highest-priority liens and then moving down to lower-priority ones. This means senior liens—often including property taxes or special assessments by law, then the first mortgage—are paid first from the proceeds. Only after all senior liens are fully satisfied are junior liens paid, and if the sale proceeds aren’t enough, the remaining liens may receive nothing. This priority-based system is why the order matters: you don’t get paid out of order, and a lower-priority lien can be wiped out if funds aren’t sufficient.