Real Estate Financing
A subordination agreement does which of the following?
- aTransfers title to a new owner
- Changes the priority of liens so one moves behind another
- cReleases the borrower from personal liability
- dAccelerates the loan balance
Answer: B · Changes the priority of liens so one moves behind another
A subordination agreement voluntarily lowers a lien's priority, allowing a later lien to take a superior position (common when a construction loan must be first). Common trap: students confuse subordination (changes priority) with novation (substitutes parties) or defeasance (releases lien at payoff).
Practice the full exam — free to start
200+ video explainers, 1,800+ practice questions, flashcards and full mock exams.
Start practicing free