A priority deed (sometimes called a deed of priority or intercreditor deed) is a contract between two or more lenders that hold security over the same assets. It records who ranks where: which lender is paid out first if the security is enforced, and how the proceeds flow.
On a typical second mortgage file, the first-mortgage holder and the second-mortgage holder enter into a priority deed that confirms the first mortgage is senior, the second mortgage is junior, and sets out the consents and notices that each must give the other. The deed often caps the senior lender's claim at a documented amount, protecting the junior lender from the senior advancing additional money under its security without notice.
Priority deeds are essential on complex commercial and development files where multiple secured lenders co-exist. They reduce dispute risk in distress and make the enforcement path predictable. Without a priority deed, the order of priority is determined by registration dates under the relevant land or PPSR rules, which is workable but less flexible than a documented agreement.