If a property has multiple mortgages and the proceeds are distributed, which mortgage is paid first?

• A. The first priority mortgage
• B. The second mortgage regardless of priority
• C. The mortgage with the highest interest rate
• D. The mortgage with the smallest balance

Answer: (A)

When sale proceeds are distributed, the lien with first priority is paid first. This means the mortgage that holds the senior lien on the property—typically the earliest registered mortgage—receives payment before any subordinate mortgages. The other mortgages are secondary and are paid only after the first-priority loan has been satisfied. Priority is determined by the order of registration (not by the loan amount or interest rate). If there aren’t enough funds to cover the first-priority mortgage in full, the second mortgage may receive nothing or only a partial amount, depending on what remains.