California Real Estate Practice Exam

Which of the following would take the position of "senior" lien?

1. Assessment bond

2. First trust deed

3. Homestead

4. The one above which was first recorded

The correct answer is: Assessment bond

The correct answer is the first trust deed, as it typically holds a senior position over other types of liens in real estate. A first trust deed is a loan secured by real property, and it is considered primary because it is the first lien in line for repayment in the event of foreclosure. This means that if the borrower defaults, the lender who holds the first trust deed has the first claim against the property to recover their investment. Assessment bonds are generally not considered senior to a first trust deed; they might follow in line or be subordinate depending on their specific terms. A homestead declaration serves to protect equity in a primary residence but does not establish a lien that would be considered senior. The reference to the one above which was first recorded does imply that recording order can establish lien priority; however, it is essential to recognize that a first trust deed will always be senior to other liens that are recorded afterward. Therefore, while recording order is relevant to establishing priority among other liens, it does not apply when identifying the senior lien in this context.