What determines the order of settlement for multiple liens against a property?

The concept that determines the order of settlement for multiple liens against a property is lien priority. Lien priority establishes the sequence in which claims against a property will be satisfied in the event of foreclosure or sale. Generally, the first lien recorded takes precedence over subsequent liens, meaning that if the property is sold or foreclosed, the first lienholder gets paid first, followed by the second, and so on.

This principle is crucial in real estate transactions because it provides certainty to lenders and other parties regarding their rights to payment. Knowing their place in the priority can influence their decision to extend credit or lend against the property. Understanding lien priority is essential for homeowners, investors, and real estate professionals to navigate potential financial risks associated with liens.