What is first lien vs second lien?

Second-lien debt is borrowing that occurs after a first lien is already in place. It subsequently refers to the ranking of the debt in the event of a bankruptcy and liquidation as coming after first-lien debt is fully repaid. Another term for this type of debt security is junior or subordinated debt.

What is 1st lien position?

A first lien is the first to be paid when a borrower defaults and the property or asset was used as collateral for the debt. A first lien is paid before all other liens. A bank that holds the first mortgage on a property has the first lien.

Can a loan be a promissory note and a lien?

One form of loan that involves both a promissory note and a lien is an investment trust deed, in which one or more lenders provide the funds for a property loan, organized via a trust.

When does a mortgage satisfaction and release lien occur?

If the borrower breaks the promise of the mortgage by missing payments, the lender can exercise the lien and initiate foreclosure to collect the outstanding money due on the loan. Mortgage satisfaction and release of the property lien occur when the terms of the loan are satisfied.

How is a mortgage secured by real estate recorded?

Sometimes the contractual promise to repay the debt and the real estate security are incorporated into a single document. Mortgages and deeds of trust are recorded in the register of deeds. This gives any purchaser or financier notice that the property is encumbered by a security lien.

How are promissory notes secured by real estate recorded?

Mortgages and deeds of trust are recorded in the register of deeds. This gives any purchaser or financier notice that the property is encumbered by a security lien. Promissory notes, creating no interest in land, are not recorded unless they incorporate the mortgage. The lender typically retains the promissory note.