National Real Estate Exam (PSI)Transfer of TitleHard
A contractor begins framing work on a house on March 1. The homeowner takes out a construction loan and the lender records its mortgage on April 1. The contractor is never paid and files a mechanic's lien on June 15, after the work is complete. In most states, what priority date is assigned to the mechanic's lien relative to the lender's mortgage?
- AJune 15, the date the lien was actually filed and recorded
- BThe lien has no legal priority date and is always subordinate to any recorded mortgage
- CApril 1, matching the mortgage recording date since both are recorded interests
- DMarch 1, the date labor or materials first began, giving the lien priority over the mortgage
Show answer & explanationAnswer & explanation
Correct answer: D. March 1, the date labor or materials first began, giving the lien priority over the mortgage
Mechanic's liens generally relate back to the date labor or materials were first furnished on the project, not the date the lien is actually filed. Because work began March 1, before the mortgage was recorded April 1, the mechanic's lien takes priority over the lender's mortgage even though it was filed later in time.
Why the other options are wrong
- A. The filing date determines when the lien becomes enforceable, but priority relates back to the first date of work.
- B. Mechanic's liens can and often do outrank later mortgages due to their relation-back priority.
- C. Matching dates would ignore the relation-back doctrine central to mechanic's lien law.
Mechanic's Lien Priority (Relation-Back Doctrine)
A mechanic's lien's priority date relates back to when labor or materials were first supplied to the project, not the date the lien is recorded.
- Can outrank mortgages recorded after work began but before lien filing
- Protects contractors and suppliers who improve real property
- Filing deadlines and rules vary by state but relation-back is a common principle
Memory trick: 'First hammer swing wins the priority race.'