Liens, Encumbrances, and Title Defects
Classifying burdens on title
Distinguish liens (money claims that can be foreclosed) from encumbrances (easements, CC&Rs, restrictions, encroachments, mineral reservations) and from title defects (forged deeds, missing heirs, incorrect legal descriptions, incapacity, defective corporate authority). Liens are specific (attached to one parcel - mortgages, mechanic's liens, special assessments) or general (attached to all the debtor's real property in the jurisdiction - judgment liens, federal tax liens).
Priority
Default rule: first to record wins, subject to statutory exceptions. Key exceptions every candidate must know: a mechanic's lien generally relates back to the commencement of work or first visible improvement and can therefore prime a mortgage recorded later; property tax liens usually outrank all private liens; purchase-money mortgages may be given priority by statute or agreement; and subordination agreements reorder priority by consent. Also understand lis pendens as constructive notice of pending litigation, HOA assessment liens and their super-priority in some states, and the limited life of certain liens (federal tax liens require refiling to stay effective).
What title insurance worries about
Unrecorded or "hidden" risks are the reason the product exists: mechanic's liens for work done but not yet claimed, federal and state tax liens not yet indexed, undisclosed heirs, forged or improperly notarized instruments, deeds delivered but never recorded, and parties who lacked capacity or authority. Add adverse possession, encroachments, and unmarketability itself.
Traps and rule of thumb
Questions often hide a lien that appears junior but legally primes - always ask whether a relation-back, tax, or purchase-money rule applies. Do not assume a recorded mortgage beats a mechanic's lien, and do not assume a judgment lien reaches property in another county.
Rule of thumb: record first, unless a statute says otherwise. Before accepting "first in time," check taxes, mechanic's liens, purchase-money status, and subordination.