Oregon Construction Contractors (CCB) Practice Test

Do all construction liens have priority over mortgages and previously filed liens?

1. Yes, all do

2. No, not all construction liens

3. Only federal liens

4. Only state-level liens

The correct answer is: No, not all construction liens

The correct answer is that not all construction liens have priority over mortgages and previously filed liens. In the context of construction and real estate, the priority of liens is crucial as it determines the order in which creditors can collect their debts from the sale of the property. Construction liens, often referred to as mechanics' liens, are typically placed on a property by contractors or suppliers who have not been paid for their work or materials. However, the ranking of these liens can differ based on the date they were filed and the specific laws of the state. Mortgages, for example, usually take precedence over construction liens that are filed after the mortgage was placed. Furthermore, if a previous lien is already recorded before a construction lien is filed, that prior lien may also take priority over the new construction lien. State laws can vary greatly in how they handle lien priorities, and there are often specific rules dictating the order of liens. Therefore, understanding the nuances surrounding lien priority—including how construction liens interact with mortgages and other existing liens—is essential for anyone operating in the construction industry. This understanding helps in legal compliance and ensuring adequate financial protection.