What is the name given to a lien on property that is junior to another lien?

A lien that is junior to another lien is referred to as a subordinate lien. This classification indicates that the subordinate lien is ranked lower in priority compared to other liens on the same property. Priority is important in the context of foreclosure or liquidation, as it determines the order in which creditors are paid from the proceeds of the sale of the collateral property.

When a property has multiple liens, the primary (senior) lien has the first claim on the property, while any subordinate liens follow in order of establishment. This hierarchy can significantly impact the risk and recovery potential for lenders holding junior liens, as they will only receive payment after the senior lien is satisfied.

In the realm of real estate and mortgage lending, understanding the distinction between various lien types and their hierarchy is vital for both lenders and borrowers. This knowledge helps make informed decisions about financing, investment, and the potential implications of multiple obligations against a property.