First position

Key Takeaways

• First position is the top spot in the order of claims against a property, so that lender is paid in full from a foreclosure sale before any junior lienholder receives anything.
• Recording order normally decides priority. RCW 65.08.070 makes an unrecorded conveyance void against a later purchaser or mortgagee in good faith and for value whose conveyance is recorded first.
• Property tax liens outrank private liens in Washington. RCW 84.60.010 gives the tax lien priority over any mortgage, judgment, debt, or obligation the property becomes charged with.
• A subordination clause moves a later loan ahead of an earlier one by agreement, so recording order is the default rule rather than an unbreakable one.

What It Means

First position is the top spot in the order of claims recorded against a property. The holder of a first position Lien is paid in full out of a foreclosure sale before any junior lienholder sees a dollar, and long before anything reaches the borrower. Almost everything a lender does to protect its money, from the title search to the rush to record, is aimed at holding that spot.

Priority normally follows the order of Recording, so the lender whose Deed Of Trust reaches the county records first is usually the lender in first position. That is why closings are sequenced so carefully. Position also drives pricing: a lender in second place is paid only from what is left after the first is satisfied, so it charges more, lends less, or both. Our rundown of loan types every broker should know shows how that risk turns up in the terms.

Position is not permanent. A subordination clause lets a later loan take a higher priority by agreement, and our explainer on subordination clauses walks through how that reshuffles the order. A seller carrying a wraparound sits in a junior position behind the existing first position loan even though the buyer sends the full payment to the seller.

How It Works in Washington

Washington's recording statute sets the default order. RCW 65.08.070 provides that a conveyance of real property not recorded is void as against any subsequent purchaser or mortgagee in good faith and for a valuable consideration from the same vendor whose conveyance is first duly recorded. Give value, act in good faith, record first, and you hold the higher position.

Two Washington rules override recording order, and both show up on exams. RCW 84.60.010 declares taxes a lien on the property and gives that lien priority to and requires it to be fully paid and satisfied before any recognizance, mortgage, judgment, debt, obligation, or responsibility the property becomes charged with, so delinquent property taxes come off the top. RCW 60.04.061 makes a construction lien claim prior to any lien, mortgage, deed of trust, or other encumbrance that attached to the land after, or was unrecorded at, the time the claimant commenced labor or first delivered materials, so a lien filed later can still outrank a deed of trust recorded after the work started.

Position decides who gets paid at a Foreclosure. RCW 61.24.080 directs the trustee to apply the proceeds first to the expense of sale, then to the obligation secured by the deed of trust, with any surplus deposited with the clerk of the superior court. Liens eliminated by the sale attach to that surplus in the order of priority they had against the property, so a junior lienholder recovers only from what is left, and frequently nothing is left.

Example

Jerome buys a Tacoma duplex with a $512,000 loan from Cascade Bank, whose deed of trust is recorded on March 3. In August he draws a $60,000 home equity line from a credit union, recorded August 14. Cascade Bank holds first position because it recorded first. Two years later Jerome defaults, and by then $9,400 in property taxes are delinquent.

The trustee's sale nets $580,000 after the expense of sale. The delinquent taxes come off the top under RCW 84.60.010, leaving $570,600. Cascade Bank is paid its $512,000, leaving $58,600. The credit union holds a $60,000 second position claim, attaches to that surplus, and comes up $1,400 short. Jerome receives nothing. Reverse the two recording dates and the outcome flips: the credit union would be paid its $60,000 in full and Cascade Bank would absorb the $1,400 shortfall.

Common Mistakes and Exam Traps

• First position is about the order of claims, not the size of the loan. A $60,000 lien recorded first outranks a $400,000 lien recorded later.
• Recording order under RCW 65.08.070 is the default rule, not an absolute one. A subordination agreement moves a later loan ahead of an earlier one by consent of the lenders.
• A Washington construction lien can outrank a deed of trust recorded before the lien was ever filed, because RCW 60.04.061 measures priority from the commencement of labor or the first delivery of materials rather than from the filing date.
• In a wraparound arrangement the seller holds a junior position behind the existing first position loan, even though the buyer sends the entire payment to the seller.