Advanced · Lesson 2 · 7 min
Priority Issues
When multiple lienholders compete, priority decides who gets paid in full — and who gets paid nothing.
Overview
Priority rules vary by lien type. Mechanic's liens often relate back to the start of work. UCC-1s follow first-to-file-or-perfect. Judgment liens follow recording date.
Equity in the asset determines how far down the stack any creditor will reach.
Key Concepts
- • Relation-back doctrine
- • First-to-file vs. first-to-perfect
- • Subordination agreements
- • Effect of bankruptcy on priority
Common Mistakes
- • Assuming a later mechanic's lien is junior to an earlier mortgage — it may not be.
- • Signing a subordination agreement without modeling worst-case recovery.
Practical Examples
Relation-back surprise
A mortgage records mid-project. A subcontractor's lien filed after the mortgage still primes the lender because the lien relates back to the project's first day of work.
Downloadable Resources
Download Lesson PDF
Educational use only. Not legal advice. Lien rules vary by state — consult licensed counsel.