During a foreclosure in Washington, the bank may sell the property to repay the debt. But what if there are other liens on the property? Who gets paid first? This is where lien priority comes in.
What is lien priority?
Simply put, lien priority is the order in which different types of liens get paid off during a foreclosure. In most cases, the first mortgage or deed of trust is paid off first, followed by any subordinate liens. On top of that, any proceeds from the sale of the property are first used to pay off the mortgage or deed of trust, with any remaining funds going towards paying off subordinate liens.
How does lien priority affect real estate disputes?
In a real estate dispute, the order of lien priority can be very important. For example, if a property gets sold during a foreclosure, the proceeds from the sale first go to pay off the mortgage or deed of trust. If there are any subordinate liens on the property, they would only get paid if there were enough proceeds from the sale to cover them.
What happens if there are two mortgages on a property?
If there are two mortgages on a property, the one with the higher interest rate is typically paid off first. However, this can vary depending on the state in which the property is located. Additionally, if one of the mortgages is a home equity loan, the proceeds from the sale may help to pay off that loan first.
If you’re involved in a real estate dispute, it’s important to understand lien priority. This will help you determine how much of the proceeds from a sale you may be entitled to, and can also help you negotiate with the other parties involved in the dispute.