Prior Lien

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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.

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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 Full Answer >>
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    Depending on the need, an individual or business may take out a form of credit that is either open- or closed-ended. While ... Read Full Answer >>
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    The most common types of closed-end credit used by both businesses and individuals are mortgages and auto loans. Businesses ... Read Full Answer >>
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    The American Dream was seriously damaged by the housing market collapse in 2008. In many ways, the American Dream is a self-fulfilling ... Read Full Answer >>
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