[flroiemo]

If I lend my child a second mortgage, can I put a lien on the property? How are liens prioritized upon sale of house?

[ScottGem]

If you get a promissory note offering the house as collateral, then yes you can register the mortgage as a lien. Liens are generally prioritized in order of when the notes were signed.

[AK lawyer]

You will need to have the child signing the note also sign a mortgage. It is the mortgage which should be recorded. A mortgage is a type of a lien.

Actually the earliest-recorded lien (such as a mortgage) gets priority. And, while the rules differ somewhat from state-to-state, it is generally the date of recording, not the date of the note, which matters.

Thus, if it is indeed a second mortgage, the first loan would be secured by the value of the house. the second mortgage would only be secured by the equity remaining after subtracting the outstanding balance for the first mortgage loan. In the event of foreclosure (either of the mortgages or of a judgment), the first mortgage would be paid off first, and anything remaining after sale would go to the holder of the second mortgage.

[flroiemo]

Very helpful answers. Thank you, Scott & AK!

[joypulv]

You might want to also think about what you each want to happen re the note if either of you should die.