Gold Coast Real Estate Practice Exam

Superior liens are distinct from junior liens primarily based on their priority during the foreclosure process. When a property is foreclosed, the holders of superior liens are prioritized and paid first from the proceeds of the sale. This priority is established by the order in which the liens were recorded, with superior liens recorded before junior liens.

Consequently, superior liens are often seen as having a more secure position since they are more likely to be satisfied first in the event of foreclosure. This aligns with why they are paid off first; they are generally considered to carry less risk for lenders compared to junior liens, which may not be paid in full even if the property's sale price is insufficient to cover all debts.

The other options do not accurately describe the relationship between superior and junior liens. While superior liens may have certain security advantages, they aren't defined by higher interest rates, nor are they limited to commercial properties.