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.

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    Find out about the steps an investor must take to invest in tax liens, along with the potential benefits of doing so. Read Answer >>
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