What is the result of having multiple liens on a property?

When multiple liens exist on a property, the order of payment is determined by their priority. This means that liens are typically paid off in the sequence they were recorded, which establishes their priority status. The first lien recorded generally has the highest priority and will be paid first from the proceeds of a sale. Subsequent liens are paid only after the preceding ones have been satisfied, reflecting the risk that lien holders took when they placed their lien on the property.

The law usually favors the established priority of liens, unless specific arrangements or agreements dictate otherwise. This understanding of lien priority is crucial for both buyers and sellers, as it impacts financial obligations and the potential risk associated with the property. Other options do not accurately depict how liens function; for instance, not all liens are treated equally in terms of payment order, and having multiple liens can indeed affect a property's market value depending on lien amounts and types.