Under priority rules, which mortgage has priority over all earlier non-purchase-money mortgages and liens?

• A. After-acquired property mortgage
• B. Subordination agreement
• C. Purchase-money mortgage
• D. Future advances mortgage

Answer: (C)

When multiple real estate liens exist, priority determines who gets paid first from the sale proceeds. A purchase-money mortgage is created specifically to finance the purchase of the property, and it has priority over all earlier non-purchase-money mortgages and liens. This protection ensures that the lender who provided funds to buy the property can be repaid before other creditors who had liens recorded beforehand, preserving the security of the financing tied to the acquisition.

Other options don’t carry that automatic senior status. An after-acquired property mortgage secures property acquired later, so it doesn’t inherently outrank existing liens. A subordination agreement is a voluntary shift in priority among lienholders, requiring agreement by the parties. A future advances mortgage secures additional funds to be lent later, but its priority typically follows the terms of the original loan or is subordinate to earlier liens, not automatically ahead of them.

So the mortgage tied to the purchase—the purchase-money mortgage—has the priority over earlier non-purchase-money liens.