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Home>Levelset Community>Legal Help>does the foreclosure of a 1st lien wipe out all other liens: 2nd liens, mechanic liens, mezzanine loans, etc.

does the foreclosure of a 1st lien wipe out all other liens: 2nd liens, mechanic liens, mezzanine loans, etc.

ColoradoLien PriorityMechanics Lien

Commercial property with 1st lien, 2nd lien, mezz debt and mechanic liens

1 reply

Nov 30, 2017
Generally speaking, when there are multiple encumbrances on a property, the one with the highest priority will be paid first. Once that highest-priority encumbrance has been paid, the next in line will be paid (and so on...). This process repeats until there is nothing left to disburse. However, the priority rules controlling the order of that "line" of creditors vary. In Colorado, the priority of a mechanics lien relates directly to the time of filing, and since mechanics liens "relate back" to the start of work on a project, mechanics liens have an advantage there. But whether the foreclosure of the first lien will wipe out the ability to recover on the remaining liens will be heavily dependent on the details of the other encumbrances and the project - it would be wise to reach out to a local attorney familiar with Colorado priority and foreclosure proceedings.
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