What principle refers to the order in which liens are paid off?

The principle that refers to the order in which liens are paid off is known as "first to record, first to right." This principle is foundational in real estate law, as it establishes that the priority of liens is determined by the order in which they were recorded. When a property is sold or foreclosed upon, any outstanding liens must be satisfied in the order of their recording dates.

For instance, if a mortgage is recorded before a mechanic's lien, the mortgage will be paid off first in the event of liquidation of the property, meaning that the lender has a superior claim to the proceeds from the sale over the contractor whose lien was recorded afterward. This system helps create clarity and predictability for lenders and property owners regarding their interests in property, promoting confidence in real estate transactions.

Other choices may focus on varying aspects of lien priority or general rules in business or law, but they do not accurately convey the specific legal framework for determining the sequence of lien payments based on recording dates.