A lender holds a first mortgage on a property in Hutchinson, Kansas. The borrower also has a judgment lien recorded against the property before the mortgage was executed. The borrower defaults and the lender forecloses. After the sheriff's sale, the proceeds are $150,000. The outstanding mortgage balance is $140,000 and the judgment lien is $20,000. Under Kansas law, which party is paid first from the sheriff's sale proceeds?
Correct Answer
D) The party whose lien was recorded first has priority, regardless of whether it is a mortgage or judgment lien.
In Kansas, lien priority is generally determined by the 'first in time, first in right' recording principle. The party whose lien was recorded first in the county register of deeds has priority over later-recorded liens. In this scenario, the judgment lien was recorded before the mortgage was executed, so the judgment lien creditor would have priority over the mortgage lender in the distribution of sheriff's sale proceeds. This is a nuanced application of Kansas lien priority rules.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
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