Prior Lien

DEFINITION of 'Prior Lien'

A lien that is recorded prior to any other claims. Prior liens must therefore be paid before any other claims in the event that the collateral that is pledged against the loan must be liquidated. Junior liens are subordinated to prior liens.

BREAKING DOWN 'Prior Lien'

A primary mortgage is an example of a prior lien. This mortgage will be paid off before any second or third mortgages, or lines of credit. A perfected security interest is also considered a prior lien.

RELATED TERMS
  1. Encumbrance

    A claim against a property by a party that is not the owner. ...
  2. Property Lien

    A property lien is a legal claim on a tract of real estate granting ...
  3. Non-Possessory Lien

    The legal claim against an asset in order to secure payment of ...
  4. Perfected Lien

    A security interest in the collateral that is used to secure ...
  5. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  6. Lien

    The legal right of a creditor to sell the collateral property ...
Related Articles
  1. Retirement

    Holding Titles On Real Property

    Find out how best to claim and convey ownership on your assets.
  2. Home & Auto

    5 Reasons Not to Use Your Home Equity Line of Credit

    Find out why taking a loan from a home equity line of credit may be a bad idea, and why you should consider alternatives.
  3. Mutual Funds & ETFs

    Trends in Capital Flows: U.S. Equities

    Analyze asset flow data for U.S. equity mutual funds and ETFs from 2014 and 2015 to identify changes in demand, investor sentiment and outlook.
  4. Credit & Loans

    Mortgage Refinance: Brick-and-Mortar vs. Online Lender

    Understand why refinancing your mortgage might benefit you, and compare using an online lender to working with a brick-and-mortar bank.
  5. Mutual Funds & ETFs

    iShares U.S. Construction vs. SPDR Homebuilders: Comparing Homebuilder ETFs (ITB, XHB)

    Learn why the U.S. housing sector may soon take off in 2016, and discover how to easily gain exposure to the sector, through these two exchange traded funds.
  6. Home & Auto

    The 3 Best Mortgage Lenders for Refinancing

    Understand the refinancing process and why it is often beneficial, and identify several lenders that offers the best refinancing deals.
  7. Home & Auto

    3 Companies with Low Mortgage Refinance Rates

    Learn why a mortgage refinance might save you thousands of dollars in interest payments, and identify three companies offering competitive rates.
  8. Credit & Loans

    Interest-Only Mortgage Case Study: Exploring Sweden's Potential New Rules

    Explore Sweden's overheating housing market while learning about the most recently proposed solution and the effect it may have on interest-only mortgages.
  9. Home & Auto

    The 3 Biggest Mortgage Lenders (NSM, WFC)

    Learn about the top mortgage lenders of 2016, trends impacting the mortgage lending markets, new product options and consumers' ability to qualify.
  10. Credit & Loans

    Would You Save with an Interest-Only Mortgage?

    Sophisticated borrowers might want to consider one of these loans to keep their initial payments low, but they need to fully understand the risks.
RELATED FAQS
  1. Are my IRAs secure against possible liens?

    Your IRA is protected from bankruptcy up to $1 million. However, in all other cases, state law determines whether any protection ... Read Answer >>
  2. What is the 1003 mortgage application form?

    Learn about the 1003 mortgage application form, what information it requires and why this form is the industry standard for ... Read Answer >>
  3. What's the difference between short sales and foreclosures?

    Understand the difference between a short sale and a foreclosure; both result in the loss of a home, either through a sale ... Read Answer >>
  4. How do you use the FNMA selling guide?

    Learn about Fannie Mae Selling Guide and find out details about how its parts provide support to the business relationship ... Read Answer >>
  5. What is the average credit score for new homebuyers? (ELLI)

    Learn the average FICO score of approved and denied home loan applications, and find out how your credit score measures up ... Read Answer >>
  6. Is an adjustable rate mortgage (ARM) safe?

    Learn why an adjustable rate mortgage (ARM) can be a safe option as long as the borrower is familiar with the underlying ... Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center