Florida Broker Practice Exam

What determines the order in which liens will be paid off if a property must be sold?

1. Encumbrance type

2. Market value of property

3. Recording date of the liens

4. Debtor's credit score

The correct answer is: Recording date of the liens

The order in which liens are paid off when a property is sold is primarily determined by the recording date of the liens. This principle is rooted in the legal concept of "first in time, first in right," meaning that the earliest recorded liens take priority over later ones. Therefore, if multiple liens exist against a property, the ones recorded earlier will be satisfied first from any proceeds of the sale, reflecting their priority status. While encumbrance types, market value, and a debtor's credit score may influence various aspects of real estate transactions, they do not dictate the order of lien payment. The specific chronology of recording offers a clear and orderly framework for addressing financial claims against the property, ensuring that all parties involved understand their rights and the hierarchy of financial obligations tied to the asset.