Final answer:
The primary loan on a property has priority over all other claims in the event of default.
Step-by-step explanation:
The statement is true. The primary loan on a property has priority over all other claims in the event of default. This means that if the borrower fails to make payments, the primary loan will be the first to be repaid before any other creditors or lienholders can make a claim on the property. This priority is established through a process called lien priority, which determines the order in which different liens are paid off.
For example, let's say a homeowner has a primary mortgage loan and a secondary mortgage loan on their property. If the homeowner defaults on their payments, the primary mortgage lender would have the first right to foreclose on the property and recoup their loan amount. Only after the primary mortgage is settled would the secondary mortgage lender have the opportunity to claim their share.
In summary, the primary loan on a property does indeed have priority over all other claims in the event of default, ensuring the lender has the first right to recoup their investment.