HRS §667-3
How foreclosure sale money is paid out
When a foreclosed property is sold, the money goes first to the mortgage being foreclosed, then to the next mortgage or lien in order of priority, and so on. Creditors are paid in the order their liens were recorded, not equally. A proper foreclosure also wipes out the liens of later mortgages on the property.
courtscreditorsdebtorsmortgage lenders
The statute, as written — Proceeds, how applied
Mortgage and other creditors shall be entitled to payment according to the priority of their liens, and not pro rata; and judgments of foreclosure that are conducted in compliance with this part shall operate to extinguish the liens of subsequent mortgages and liens of the same property, without forcing prior mortgagees or lienors to their right of recovery. The surplus after payment of the mortgage foreclosed, shall be applied pro tanto to the next junior mortgage or lien, and so on to the payment, wholly or in part, of mortgages and liens junior to the one assessed. [CC 1859, §1233; RL 1925, §2889; RL 1935, §4722; RL 1945, §12422; RL 1955, §336-3; HRS §667-3; am L 1972, c 90, §9(c); am L 2011, c 48, § 16; am L 2012, c 182, §12]
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