A property owner fails to pay $45,000 owed to contractors. The mechanics lien is properly filed and foreclosure is initiated. What is the typical priority of lien payments in Hawaii?
Correct Answer
B) Property taxes, first mortgage, mechanics liens
In Hawaii, the typical lien priority is: (1) property taxes, (2) first mortgage, (3) mechanics liens, (4) other creditors.
Why This Is the Correct Answer
Hawaii follows a well-established priority hierarchy in foreclosure proceedings: (1) property taxes always come first as a super-priority lien, (2) the first mortgage is next because it was recorded before most mechanics liens, and (3) mechanics liens come after. This order ensures governmental revenue obligations are satisfied before private creditors.
Why the Other Options Are Wrong
Option A: Mechanics liens, first mortgage, other creditors
Placing mechanics liens ahead of the first mortgage is incorrect. Mortgages recorded prior to the commencement of work generally have priority over subsequently filed mechanics liens. Property taxes, not mechanics liens, hold the first position.
Option C: First mortgage, mechanics liens, other creditors
Placing the first mortgage before property taxes is incorrect. Property taxes are a statutory super-priority lien — they outrank all other encumbrances including mortgages, regardless of recording date.
Option D: Property taxes, mechanics liens, first mortgage
Placing mechanics liens above the first mortgage inverts the correct order. A pre-existing recorded mortgage holds priority over a mechanics lien filed after the mortgage was recorded.
Memory Technique
Remember the acronym 'TMO' — Taxes first, Mortgage second, Others (mechanics liens) third. The government always gets paid first.
More Hawaii Questions
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A contractor's license expires on June 30th. What is the late renewal penalty fee in Hawaii?
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Under Hawaii's mechanics lien law, a subcontractor must provide preliminary notice within how many days of first furnishing labor or materials?
A subcontractor provides $28,000 worth of plumbing work but is not paid by the general contractor. Under HRS 507, what is the priority of the mechanics lien compared to a mortgage recorded before construction began?
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A contractor fails to obtain required building permits before starting work. The property owner discovers this and terminates the contract. Under Hawaii law, what is the contractor's right to payment?
A contractor has 12 employees with a total annual payroll of $480,000. If the workers compensation rate is $12.75 per $100 of payroll, what is the annual premium?
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