Lenders and property buyers have the same concern with regard to the title. They want to make sure that it is clean and defect-free, or at least reasonably clear. Mortgage lenders and property buyers will seek to avoid all encumbrances that may affect their interest in the title. The first mortgage lender wants to be sure that it has the first lien position (after the real estate taxes) on the title; the second mortgage lender wants to ensure that it has the second lien position. Liens, easements, deed restrictions and other encumbrances against a property restrict how property can be handled, owned and transferred. Thus, if the property owner owes taxes or has defaulted on a loan, a lien for that debt can be recorded against the property. The “Marketable Title” article discusses this issue in depth. If the current owner does not or will not eliminate these liens, he or she may still be able to sell it. But it would be difficult. The new buyer would have to agree to accept the existing liens and encumbrances. If the new buyer will be using a mortgage loan to buy the property, the first mortgage lender will normally require that all liens be paid off before or at the closing. Claims against the property, such as liens, follow certain rules:

Legal recording of liens
Legitimate liens are legal regardless of whether they are recorded or not. However, liens will not carry any weight against the property unless recorded with the local governing authority, which is usually the county records office. Moreover, there are often time limits as to how long a unrecorded lien is valid and recordable. Anyone may record a lien against another person’s property, as long as the current property owner has legally agreed to the lien. For example, most home improvement contracts contain a clause allowing the contractor to record “mechanics & materialmen” lien if the home owner fails to pay the bills.
Order of liens
Property liens are normally recorded and satisfied in chronological order: “first come, first serve.” A first mortgage loan, for example, holds the first lien position against a property. A second mortgage loan is recorded in the second lien position. When a property is sold, all the funds will pay off the first lien debt; any funds remaining will then be used for the next lien, etc. The exception, of course, is the government. Taxes owed to the government normally take primary lien in effect, the government always cuts to the front of the line. First mortgages always want to be first in line—i.e., they want to have first lien. If other liens already exist when a homeowner applies for a first mortgage loan, the borrower must satisfy or subordinate the other liens.
Thus, if a homeowner has both a first and junior mortgage but refinances only the primary mortgage, the junior mortgage must be subordinated to the new first mortgage. The lien subordination agreement (issued by the junior mortgage to be subordinated) will then be recorded into the county records so that the new order of liens becomes official.