Several categories of liens can take priority over a first mortgage even when the mortgage was recorded first: property tax liens, special assessments, a capped portion of unpaid homeowners’ association dues, mechanic’s liens that relate back to when work began, and federal tax liens filed before the mortgage was recorded. Each is a legislative or judicial exception to the ordinary rule that the earliest-recorded lien wins.
The Default Rule These Liens Break
Lien priority normally follows “first in time, first in right.” The first lien recorded in public land records gets paid first from foreclosure proceeds; every later lien falls in line behind it. A mortgage recorded in 2018 is paid in full before a mortgage recorded in 2020 sees a dollar.
Priority matters most when a sale doesn’t cover the total debt against the property. Junior lienholders take whatever is left after senior lienholders are satisfied, and sometimes that is nothing. The exceptions below exist because legislatures and courts decided certain debts are important enough to jump the line regardless of when the mortgage was recorded.
Property Tax and Special Assessment Liens
Property tax liens are the clearest example. When a homeowner falls behind on local or state property taxes, the taxing authority’s lien jumps ahead of every other claim against the property, regardless of when any mortgage was recorded. Governments depend on property tax revenue to fund schools, roads, and emergency services, and no private lender’s claim is allowed to block that funding stream.
The debt grows quickly. Interest on unpaid property taxes commonly runs between 5% and 9% annually depending on the jurisdiction, and many localities pile on penalties and fees. Some jurisdictions sell delinquent tax debt to private investors, who then hold the lien and can eventually force a sale.
Special assessment liens work the same way. When a local government installs sidewalks, sewer lines, or other infrastructure that benefits a specific property, it can levy an assessment to cover the cost. Most jurisdictions give that lien priority over a first mortgage, on the theory that the improvement raises the property’s value and therefore benefits the mortgage lender too.
Homeowners’ Association and Condo Association Liens
When a homeowner stops paying HOA or condo dues, the association can file a lien. In many states, a portion of that lien carries super-priority status and jumps ahead of the first mortgage. Associations need dues to maintain common areas, pay insurance, and keep the community running, and lawmakers decided they shouldn’t be starved of funds while a foreclosure drags on.
The super-priority slice is limited. Jurisdictions that follow model legislation typically cap it at six to nine months of unpaid assessments plus related collection costs. Anything above the cap drops back into normal priority order behind the first mortgage.
The practical impact is larger than the cap suggests. An HOA can foreclose on its super-priority lien, and in some jurisdictions that foreclosure can extinguish the first mortgage entirely. That is why some loan agreements require borrowers to stay current on association dues, and why lenders monitor HOA delinquencies closely.
Mechanic’s Liens
Contractors, subcontractors, and material suppliers who aren’t paid for work on a property can file a mechanic’s lien. What makes these liens dangerous to a mortgage lender is the relation-back doctrine. The lien’s priority doesn’t date from when it was filed in the public record; it relates back to when work first began on the property. If a contractor started a kitchen renovation in March and a new mortgage was recorded in April, a mechanic’s lien filed months later can outrank that mortgage because the work predates the recording.
The exact relation-back date depends on the state. Some tie it to the first visible work on the project, some to the date materials were first delivered, and some to when the contract was signed. The filing deadline after the work is completed also varies widely, from roughly 30 days to eight months.
The real risk is invisibility. A subcontractor the homeowner has never met, hired by the general contractor, can hold a priority claim that doesn’t show up in any public record until the lien is eventually filed. A title search run during that gap won’t find it.
Federal Tax Liens
When someone owes federal taxes and ignores the IRS’s demand for payment, a lien automatically attaches to everything they own, including real estate.1Office of the Law Revision Counsel. 26 U.S. Code 6321 – Lien for Taxes Unlike a property tax lien, though, a federal tax lien does not automatically outrank a first mortgage.
The IRS lien only becomes effective against a mortgage holder after the IRS files a Notice of Federal Tax Lien in the appropriate local filing office where the property is located.2Office of the Law Revision Counsel. 26 U.S. Code 6323 – Validity and Priority Against Certain Persons Until that notice is filed, a mortgage lender with an already-recorded security interest has priority. After it’s filed, “first in time, first in right” applies as usual: a mortgage recorded before the notice keeps its senior spot, and a mortgage recorded after loses.
The federal tax lien also reaches further than a mortgage. A mortgage attaches only to the property described in the loan documents. The IRS lien attaches to all property and rights to property belonging to the taxpayer, including property acquired after the lien arises.1Office of the Law Revision Counsel. 26 U.S. Code 6321 – Lien for Taxes Selling or foreclosing on one property doesn’t eliminate the underlying tax debt; the lien follows the taxpayer to other assets.
Subordination Agreements Can Rearrange Priority
Priority isn’t always fixed by recording dates or statute. Lienholders can voluntarily reorder their positions through a subordination agreement, in which a senior lienholder agrees to let a junior lienholder move ahead.
Refinancing is the common example. A homeowner has a first mortgage and a home equity line of credit. When the first mortgage is refinanced, the old one is paid off and a new one is recorded. Under strict “first in time” rules, the home equity line would now be senior because it was recorded earlier. To prevent that, the refinancing lender requires the home equity lender to sign a subordination agreement putting the new first mortgage back on top.
Subordination agreements must be in writing and recorded to be effective. If you’re refinancing with a second mortgage or home equity line in place, expect extra time while the lenders negotiate. Some junior lienholders refuse to subordinate, which can derail the refinance entirely.
How to Find Priority Liens Before They Hurt You
A professional title search is the standard method for uncovering liens. It examines public records at the county recorder’s office, including deeds, mortgages, tax records, and court judgments, to build a picture of who has a claim and in what order.
Title searches catch most recorded liens but have blind spots. Mechanic’s liens that haven’t been filed yet, municipal utility charges, and some HOA assessments may not appear in the record on the day of the search. These claims can surface after closing.
Title insurance is the backstop. A lender’s title policy protects the mortgage lender’s priority position if an undiscovered lien surfaces; an owner’s policy protects the buyer’s equity. If a covered lien emerges later, the insurer pays the cost of clearing it or compensates the insured for the loss. Given how many priority liens can exist invisibly until they’re filed, title insurance is often the only realistic protection against claims a diligent search could not have found.