What happens to junior liens during a foreclosure process?

During a foreclosure process, junior liens are typically wiped out by the foreclosure. This means that if a property is foreclosed upon due to the non-payment of a senior lien—such as a first mortgage—any junior liens that exist on the property, like second mortgages or mechanics liens, will be eliminated from the title. The successful bidder at the foreclosure auction acquires the property free and clear of any junior liens, as those liens are subordinate to the senior lien that initiated the foreclosure.

This is crucial to understanding the hierarchy of liens in real estate financing. The senior lienholder has the first claim to the proceeds from the sale of the property, and since junior liens are established subsequent to the senior lien, they do not take precedence in the case of foreclosure. Therefore, once the foreclosure is completed, these junior liens become unenforceable against the property and no longer encumber the new owner.