What is the term for a lien that has another senior lien superseding it in priority?

A junior lien is a lien that has a lower priority compared to another senior lien. In the context of real estate, liens are classified based on their priority; the order of priority determines the sequence in which creditors are paid in the event of a property foreclosure. When a senior lien exists, it takes precedence over other liens, meaning that if the property needs to be sold to satisfy debts, the senior lien will be paid first. Any subsequent liens, such as the junior lien, are only paid after the senior lien has been settled.

This classification is essential because it affects the risk associated with lending and borrowing. For example, lenders who place junior liens are often aware that their recovery in case of foreclosure is at risk, as they stand to receive payment only after the senior lien is fully satisfied. This distinction is crucial in real estate transactions and financing.