In terms of payment priority among mortgages, which principle applies?

The principle of "first in time, first in right, unless altered by contract" accurately reflects the hierarchy that governs the priority of interests in mortgages. This principle establishes that, generally, the mortgage that is recorded first will take precedence over subsequent mortgages in the event of default or foreclosure.

This foundational rule is based on the understanding that when multiple mortgages exist on a property, the lender who filed their claim first has the first claim to the proceeds from the sale of the property, if it were to be sold under duress (like foreclosure). However, this priority can be altered by agreement among the parties involved, such as subordination agreements or inter-creditor agreements, which can adjust the standing of the mortgages in terms of priority and payment.

The other options present alternative concepts that do not align with established mortgage priority rules. Therefore, understanding that timing of recording and contractual agreements can affect the standing of mortgage claims is crucial for comprehending payment priorities.