Lien Priorities

A lien is a claim for money owed against another person's real estate. Deeds of Trust and mortgages are examples of liens. Tax authorities also have either automatic liens against property for unpaid taxes or have the right to file liens. A County's lien for unpaid property taxes is an automatic lien.

If there is more than one lien on property, its priority determines the order in which it is paid. A lien which has priority over another lien is sometimes called a "senior lien." A lien which does not have priority over another lien is sometimes called a "junior lien." The most senior lien is called a "first lien," the next most senior lien is called a "second lien," and so on.

Washington law requires that liens, except automatic liens, be recorded with the Auditor of the County where the real estate is located. This is deemed to give notice to everyone, even if they do not check the Auditor's records. If a lien is not recorded, it will generally not have priority over a later lien which is recorded. The earliest recorded lien has priority over a later recorded lien, even if the later recorded lien was dated and signed before the first recorded lien was dated and signed.

If you have a lien, you can foreclose the lien. Foreclosing the lien transfers title to the real estate to the lienholder and clears all junior liens from the title. For example, the beneficiary of a first lien Deed of Trust who forecloses clears any later recorded Deed of Trust from title. The holder of the second Deed of Trust is not entitled to payment by the holder of the first Deed of Trust. However, the beneficiary of a second lien Deed of Trust who forecloses cannot clear the first lien Deed of Trust from title, and takes subject to that first lien Deed of Trust. That includes the duty to make payments due on the first lien Deed of Trust to avoid its foreclosure.

Lien priorities are complicated. There are exceptions and special situations in which these general rules do not apply. Consulting a real estate attorney on such issues is a good idea.