What is defined as a lien that has another lien superseding it in priority?

A junior lien is defined as a lien that has another lien superseding it in priority. This distinction is important because the priority of liens determines the order in which creditors can be paid in the event of a default. A junior lienholder will only receive payment after the senior lienholders have been compensated, which can significantly impact their risk and investment strategy.

In contexts such as real estate, understanding the hierarchy of liens is crucial. For instance, if a property is foreclosed upon, the proceeds from the sale are used first to pay off the senior lien before any distributions are made to junior lienholders. This subordinate position means that junior lienholders face a higher level of risk since they are last in line for payment.

The other options refer to terminologies that differ in meaning or don’t capture the concept of a lien being subordinate to another. For example, a senior lien is the first in priority, while a priority lien generally refers to the highest-ranking lien. An inferior lien suggests a similar lower status but is not a commonly used term in this ranking context.