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Mortgage priority, or ranking, is the order in which multiple mortgages registered against the same property are paid out of sale or foreclosure proceeds — generally determined by the order of registration on title, so the first mortgage registered normally ranks ahead of a second mortgage or other later charge.
Each mortgage registered against a property is generally paid in the order it was registered, not the order it was signed or funded — the title registration date controls. A first mortgage is paid in full before a second mortgage receives anything from a sale or default recovery, and a second mortgage is paid before a third-ranking charge.
Priority can be changed by agreement — for example, a lender agreeing to a postponement so a new first mortgage can be registered ahead of an existing charge, common when refinancing while a lien or second mortgage is already on title. Anyone lending or holding a lower-ranking charge takes on more risk, since there may be little or nothing left for them if the property does not sell for enough to cover higher-ranking debt.
Registration order controls: in most Canadian land registry and land titles systems, priority follows the order mortgages and other charges are registered against title.
Postponements re-order priority: an existing lender can agree in writing to postpone its ranking behind a new mortgage, which is common when refinancing a property that already has a second mortgage or lien registered.
Statutory liens can jump the queue: certain liens (such as construction liens in some provinces) can take priority in specific circumstances regardless of registration date — confirm with a real estate lawyer.
Title searches confirm ranking: a title search before closing shows every registered charge and its priority order.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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