Which creditors have priority during the foreclosure of residential real estate?
The term “priority” often is used in the context of a mortgage foreclosure proceeding. A creditor with priority has superior lien rights to other creditors and is given the opportunity to collect outstanding debts before other creditors. In Indiana, lien priority generally is determined by the date a lien is recorded at the county recorder’s office where the property is located. However, certain obligations and liens are unaffected by lien priority. To explain, it’s helpful to use an example: In order to purchase a primary residence, you received a first mortgage loan for $80,000. The first mortgage was executed and recorded on Jan. 1, 2006. Over the following year, your home appreciated and you applied for and received a second mortgage loan from a different bank for $10,000. The second mortgage was recorded on Jan. 1, 2007. Sometime during 2007, however, you were sued for failure to pay a creditor $5,000, and the creditor received a judgment against you for $5,000. The judgment is re
