Explanations

The priority of a trust deed, determining whether it is a “first” or “second” (or junior) lien, is primarily established by the time and date of recordation. In California, which commonly uses deeds of trust as security instruments, the date a document is recorded in public records generally determines its lien priority. The principle often referred to is “first to record, first in right”.

Here’s why this is the distinguishing factor:

While a recorder’s margin notation (C) might reflect the recording details, it is the act of recordation itself and its timestamp that legally defines the priority. An instrument number obtained during registration also helps determine priority, with smaller numbers indicating earlier registration.

A trust deed acts as a security instrument that creates a voluntary lien on real property to secure the repayment of a debt.

A property can have multiple liens, and their priority is crucial, as junior liens (like a second trust deed) carry a higher risk and typically have higher interest rates because they are more likely to be “wiped out” in a foreclosure if the first lienholder forecloses.

The actual heading of the document (A) or the information within the promissory note (B) might indicate if it’s intended to be a first or second, but the legal priority is confirmed by the recording date.

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