What Is the Priority of a Purchase Money Deed of Trust?

Any time all or part of the purchase price for property is secured by a deed of trust recorded against the property, the deed will be considered a "purchase money deed of trust."

Read More: What Is a Second Trust Deed?

A deed can only be considered a purchase money deed if it is recorded as part of the same transaction for the debt it secures; i.e., when the loan is made to purchase the property, the deed must be signed and recorded as part of the same transaction to be considered a purchase money deed.

If the deed is not recorded, it will not be given the priority of a purchase money deed even though the loan provided in exchange for the deed was used to purchase the property.

A parcel of property can have any number of liens recorded against it, both voluntary (e.g., a mortgage or deed of trust) or involuntary (e.g., a judgment or mechanic's lien). Even if you do not own real estate, a lien for an unpaid judgment or taxes can still be recorded against you in the county recorder's office.

The general rule is that a lien's priority over other liens is determined by the date of recording with the county recorder's office. The earlier recorded lien has priority over all other liens recorded at a later date. However, in the case of a purchase money deed of trust, the general rule of first-in-time lien priority does not apply and the purchase money deed will take priority over all other liens incurred by the purchaser, regardless of when they were recorded.