Prior Lien

(redirected from Prior Liens)

Prior Lien

A lien on an asset that has a stronger claim than other liens on the same asset. For example, the first mortgage on a house has a prior lien on the house, which takes precedent over the second and third mortgages. See also: Rule of Absolute Priority.
Mentioned in ?
References in periodicals archive ?
A holder of a valid mechanic's lien is treated as a secured creditor and entitled to full payment, provided that the property securing the lien has value in excess of prior liens and encumbrances.
Mason of Princeton took "a portion of loan proceeds he received from lenders which were intended to be used in real estate transactions to pay off prior liens on properties.
3) Placement of prior liens on the properties securing the bonds was prevented by a negative pledge provision, although mergers were allowed, provided the security of the bondholders was not impaired [2].
9 million of 4% prior lien bonds, due in 1997; and $47.
The general rule for lenders bidding on property being sold at a sheriff's sale is that the foreclosing lender should bid up to an amount equal to the lesser of (1) the fair market value of the property (determined by a recent appraisal) or (2) the sum of (a) the amount of the lien in question plus (b) all prior liens to be divested by the sale plus (c) costs.
Of course, prior liens that are not divested by the sale must be taken into consideration for the purpose of computing fair market value.
The foreclosure purchaser now owns the property "subject to" the prior liens.

Full browser ?