Understanding Liens and Lien Priority for the Massachusetts Real Estate Exam

For candidates preparing to earn their real estate license in the Bay State, mastering the concept of encumbrances is non-negotiable. Among the most heavily tested encumbrances are liens. A lien is a financial claim or charge against a property that provides security for a debt or obligation. If you want to ace the exam and eventually guide clients through Massachusetts deeds and title transfer, you must thoroughly understand how liens work, how they are classified, and—most importantly—the order in which they are paid off during a foreclosure.

This article serves as a deep dive into Massachusetts-specific lien laws, including statutory references to the Massachusetts General Laws (M.G.L.). For a broader overview of all exam topics, be sure to bookmark our Complete Massachusetts Exam Guide.

Classifying Liens: The Basics

Before diving into priority, you must be able to classify liens accurately. The Massachusetts exam frequently tests your ability to distinguish between different types of liens based on how they are created and what they attach to.

Voluntary vs. Involuntary Liens

• Voluntary Liens: These are created intentionally by the property owner's action. The most common example is a mortgage lien. When a buyer takes out a loan to purchase a home in Massachusetts, they voluntarily grant the lender a lien on the property as collateral.
• Involuntary Liens: These are created by law, without the property owner's direct consent, usually due to unpaid debts. Examples include property tax liens, mechanic's liens, and judgment liens.

Specific vs. General Liens

• Specific Liens: These attach only to one specific piece of real estate. If you don't pay your property taxes on your Boston condo, the city places a tax lien only on that condo, not on your vacation home in Cape Cod. Mortgages and mechanic's liens are also specific.
• General Liens: These attach to all assets belonging to the debtor, including both real and personal property. Examples include federal income tax liens (IRS) and court judgments.

The General Rule of Lien Priority in Massachusetts

When a property is sold at a foreclosure auction, the proceeds must be distributed to creditors. But who gets paid first? The general rule in Massachusetts, as in most states, is "First in time, first in right."

This means that lien priority is generally established by the date and time the lien was recorded at the local Massachusetts Registry of Deeds (or the Land Court, for registered land). If a first mortgage was recorded in 2020, and a second mortgage was recorded in 2023, the first mortgage is paid entirely before the second mortgage sees a single dime.

Assuming a lien is simply "first in time" without considering statutory exceptions is one of the common mistakes candidates make on the exam. Massachusetts law carves out several critical exceptions to this rule, known as Super Liens.

Massachusetts "Super Liens" and Priority Exceptions

Certain liens are granted statutory priority over previously recorded liens. The Massachusetts real estate exam will heavily test your knowledge of these exceptions.

1. Property Tax Liens and Municipal Assessments (M.G.L. c. 60)

In Massachusetts, municipal property taxes and special assessments automatically hold the highest priority. They jump to the very front of the line, ahead of all other liens, including first mortgages, regardless of when the mortgage was recorded. Unpaid municipal water and sewer bills can also become super liens if they are added to the property tax bill.

2. The Massachusetts Condominium Super Lien (M.G.L. c. 183A)

This is a uniquely important statute for Massachusetts real estate agents. Under M.G.L. c. 183A, Section 6, a condominium association has the right to establish a "super lien" for up to six months of unpaid common area fees (condo fees).

This six-month super lien takes priority over a first mortgage. Because this threatens the lender's security, most mortgage lenders in Massachusetts will quickly step in to pay the delinquent condo fees on behalf of the borrower to protect their first-position status.

3. Mechanic’s Liens (M.G.L. c. 254)

A mechanic's lien is a specific, involuntary lien filed by contractors, subcontractors, or material suppliers who have not been paid for improvements made to a property. In Massachusetts, the priority of a mechanic's lien can be tricky.

Under M.G.L. c. 254, a mechanic's lien's priority relates back to the date the Notice of Contract was recorded at the Registry of Deeds. It does not automatically jump ahead of a previously recorded first mortgage, but it will take priority over any mortgages or liens recorded after the Notice of Contract was filed.

Practical Scenario: Foreclosure Payout Priority

To succeed on the exam, you must be able to apply these rules to a practical scenario. Let's look at a hypothetical foreclosure sale in Worcester, Massachusetts.

The Scenario: A property is foreclosed and sells at auction for $320,000. The property has the following outstanding debts:

1. First Mortgage (Recorded 2018): $250,000
2. Unpaid Property Taxes (2025): $15,000
3. Second Mortgage (Recorded 2021): $40,000
4. Mechanic's Lien (Notice filed 2023): $12,000
5. Condo Association Super Lien (6 months unpaid fees): $3,000

The Payout Order:

1. $15,000 - Property Taxes (Absolute Super Priority)
2. $3,000 - Condo Super Lien (Statutory Priority over First Mortgage)
3. $250,000 - First Mortgage (First in time among remaining)
4. $12,000 - Mechanic's Lien (Recorded before Second Mortgage)
5. $40,000 - Second Mortgage (Last in time)

Total Paid: $320,000. In this exact scenario, all creditors are made whole, but if the property sold for only $275,000, the Second Mortgage and Mechanic's Lien holders would receive nothing or only partial payment.